The Investor-State Dispute Settlement System

Reform, Replace or Status Quo?

Foreword by Annette Magnusson

Edited by

Alan M. Anderson & Ben Beaumont

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Editors

Alan M. Anderson, PhD, specializes in dispute resolution, particularly international arbitration, both as counsel and as an arbitrator. He received his Master of Business Administration and Doctor of Law (magna cum laude) from Cornell University, New York. He received a Master of Laws, with distinction, specializing in international dispute resolution, from the University of London. He earned his PhD in War Studies from King’s College London. Dr Anderson is a Fellow of the Chartered Institute of Arbitrators and a Fellow of the Australian Centre for International Commercial Arbitration, where he is in his second term as a member of its Council. He is also a Fellow of the Asian Institute of Alternative Dispute Resolution and an accredited international mediator. A frequent presenter and writer, Dr Anderson is the secretary of the Forum for International Conciliation and Arbitration, an international thinktank. He has participated in the work of UNCITRAL’s Working Groups II and III since 2015. He is the President of Alan Anderson Law Firm LLC based in Minneapolis, Minnesota, US and a door tenant with Littleton Chambers in London, where he is a member of its international arbitration practice group.

Ben Beaumont is a barrister and member of Garden Court Chambers in London, England. He is a Chartered Arbitrator, a Fellow of the Chartered Institute of Arbitrators, a Fellow of the Royal Institution of Chartered Surveyors, and a member of the TECBAR and CIArb panels of arbitrators, adjudicators, and dispute board member. Mr Beaumont is a trained mediator. He is the founder and chair of the Forum for International Conciliation and Mediation, an international think-tank, and co-founder of International Dispute Resolution, an international group of dispute resolution specialists. Mr Beaumont is an author of various books on dispute resolution and often speaks on the topic. He has been appointed as arbitrator in more than 300 disputes. He regularly sits as a dispute avoidance board member and as a mediator. He has also been appointed as an adjudicator on more than twenty occasions. He has acted in arbitrations in various locations including UAE, Hong Kong, Singapore, Vietnam, France, United Kingdom and the United States. Mr Beaumont has been active in all five Working Groups of UNCITRAL, particularly Working Group VI, where he was appointed to an expert subgroup drafting the legislative guide to the model law on secured transactions. He also is active on various ICC working groups drafting model contracts.

Contributors

Ahmed Abdel-Hakam is a senior associate in Eversheds Sutherland’s International Arbitration and Public International Law practice. He is a Solicitor-Advocate before the Higher Courts of England & Wales and a French Avocat. He represents clients in high-profile cross-border disputes with a multilingual element and legal and procedural issues across civil and common law jurisdictions. He has experience in investment and commercial arbitration proceedings under the rules of all the major arbitral institutions, dealing with disputes covering a broad range of sectors, with a focus on oil and gas. Ahmed is also a member of the Association of International Petroleum Negotiators. He also provides training to governments on investment treaty arbitration and is a contributor to Oxford University Press’ online publication ‘Investment Claims’. In 2019, Ahmed was selected as a Young Leader by the Franco-British Council, which selects a group of talented French and British individuals under the age of 40 each year, with distinguished careers across a variety of sectors from sciences to arts, politics, law, the military and finance.

Venetia Argyropoulou, PhD, is an Extramural Fellow at Tilburg University, the Netherlands, and Lecturer of Finance Law, at the European University of Cyprus and Hellenic University of Thessaloniki. She is educated in both civil and common law and has actively practised law in Greece and Cyprus. She has worked as a researcher for the University of Cyprus and as a lecturer for the University of West London. She is a member of the Spark Legal Network and the Cyprus Correspondent of the IBFD, Tax Analysts, IBA’s Taxes Committee, the World Bank’s Women, Business and the Law Initiative, Organisation for Economic Co-operation and Development’s (OECD’s) Social Institutions and Gender Index and the Observatory for Taxpayers’ Rights. She is the correspondent for the Yearbook of International Environmental Law on the International Monetary Fund’s (IMF’s) Initiatives for Environment, Oxford Publishing. Additionally, she is listed in the European Court of Auditor’s list of Experts in Financial Law and she has been selected as the best international law lawyer of Cyprus for 2016 and 2017 by Best 100 and International Advisory Experts. She is the IBA’s Individual Tax and Private Client Committee Scholar for 2017.

Fahira Brodlija is the country coordinator for a regional legal reform project in the Western Balkans and an adjunct lecturer at the International University of Sarajevo, Bosnia and Herzegovina. In addition, Ms Brodlija is Director of Research for Arbitrator Intelligence, a global aggregator of data on arbitrations and arbitrators, seeking to enhance the quality and diversity of arbitrator appointments in international arbitration. Since 2016, Ms Brodlija has been coaching Vis Moot teams of the law faculties from Bosnia and Herzegovina. She is also a member of Association ARBITRI, an NGO founded by young attorneys in Bosnia and Herzegovina, seeking to enhance and promote the arbitration system in the country. Ms Brodlija obtained her BA in 2016 from the University of Sarajevo, Faculty of Law and her LLM in 2017 from the University of Pittsburgh, School of Law, Pittsburgh.

Charles H. Camp is an international lawyer with over thirty years of experience representing foreign and domestic clients in international litigation, arbitration, negotiation, and international debt recovery. In 2001, Mr Camp opened the Law Offices of Charles H. Camp, P.C. in Washington, DC to focus on effective, personalized representation in complex, international matters. Mr Camp teaches international negotiations at the George Washington University Law School, Washington, DC.

Kai-chieh Chan holds a Bachelor of Arts in Economics from National Taiwan University, Taiwan,a Master of Laws (cum laude) from Institut d’études politiques de Paris (Sciences Po Paris), France, a second Master of Laws from the University Paris 2 Panthéon-Assas, France, and is currently pursuing a PhD degree at the University Paris 2 Panthéon-Assas. He has worked as a trainee in several international law firms. His research focuses on international economic law, arbitration, and financial law. His works have been published in the Revue générale de droit international public, Utrecht Journal of International and European Law, Journal de l’arbitrage de l’Université de Versailles, Kluwer Arbitration Blog, and the Nordic Journal of International Law.

AnthonyR.Daimsis has been teaching at the University of Ottawa, Canada, since 2003 and is the Director of the BiJural (common law/civil law) National Programme. He teaches Contracts Law, International Sales Law, International Commercial Arbitration and supervises the common law Jessup, Vis and FDI moot teams. Professor Daimsis is the lead instructor for the Professional Certificate in International Arbitration, which aims to introduce senior lawyers to the world of international arbitration by covering the process from start to finish. He is a door tenant at Littleton Chambers in London, England, and member of its international arbitration group. His experience includes serving as counsel, arbitrator, and as an expert witness in foreign investment disputes, and in telecommunications, underground resources, international commercial contract and construction disputes. Professor Daimsis appears before Canadian courts, including the Canadian Supreme Court, to set aside arbitral awards and for their recognition and enforcement, as well as in conflict of laws and commercial matters. He has delivered lectures and keynote addresses around the world, including London, New York, Hamburg, Stockholm, Beirut, Tehran, Naypyidaw, and Toronto.

PallabDas is a research associate and teaching assistant at the National Law University of Odisha (NLUO) in India, where he teaches Maritime Law, Criminal Law and International Commercial Arbitration. He is also in charge of the Centre for Maritime Law at NLUO. He completed his LLM from Swansea University, United Kingdom on an International Excellence Scholarship in 2015, with a specialization in international commercial and maritime law and his BSL-LLB from ILS Law College, Pune, India. He completed Diploma in International Commercial Arbitration from Austrian Arbitration Academy, Vienna in 2018. He has written many articles as well as a book entitled Justice for Women: Legal Compendium. He is also the editor of the book on maritime law, Through the Lens of Maritime Law: A World View, and the editor of the second edition of the book Maritime Jurisdiction and Admiralty Law in India. Prior to joining NLUO, he practised in the High Court of Orissa and worked as a Civil Judge, Odisha Judicial Services. Pallab is a Member of Chartered Institute of Arbitrators and an associate member of Asian Institute of Alternate Dispute Resolution, Malaysia.

Chuanyu Fan has studied at the Institut d’études politiques de Paris (Sciences Po Paris), Universidad Pontificia Comillas (Madrid), and Peking University, China. She is currently a PhD candidate at both University Paris-Est and the University of Geneva, Switzerland. Her doctoral thesis concerns the permanent sovereignty of States over their natural resources in international economic law. Her professional experience includes long-term internships in international law firms, multinational corporations, and the Beijing Arbitration Commission. She specializes in project finance and corporate law. Admitted to the Paris Bar School (Ecole de Formation professionnelle des Barreaux), she expects to qualify as a French lawyer in late 2020.

Michael R. Garcia is a litigation associate at the Boston office of a global law firm. He is a 2016 graduate of the University of Michigan Law School, where he was a member of the Michigan Journal of International Law and an executive board member of the Michigan chapter of the Syrian Accountability Project. While in law school, Mr Garcia was named a 2015 Geneva International Fellow and spent a semester at UNICEF’s office in Geneva, Switzerland, advocating for children’s rights at the United Nations Human Rights Council. His article entitled, ‘Clayton/Bilcon, Investor-State Arbitration and International Approaches to Trade and Investment’ was published in volume 13 of the Manchester Journal of International Economic Law.

Frank J. Garcia is Professor of Law and Dean’s Distinguished Scholar at the Boston College Law School, United States. A Fulbright Scholar, he has lectured widely on globalization and international economic law in Europe, South America and the Asia/Pacific region. He is the author, among other volumes, of Consent and Trade: Trading Freely in a Global Market (2019) and Global Justice and International Economic Law: Three Takes, both published by Cambridge University Press, and a co-author of Rethinking International Investment Governance: Principles for the 21st Century (2018). Professor Garcia is a Senior Fellow of the Columbia Center on Sustainable Investment (CCSI) and a member of the editorial board of the Oxford Journal of International Economic Law.

Guillermo Garcia-Perrote is a senior associate with Herbert Smith Freehills in Sydney, Australia. He is an international arbitration lawyer, admitted in England and Wales and Spain. In Sydney, he follows an increasingly active business relationship between Spain, Australia and the APAC region. Mr Garcia-Perrote advises clients on complex cross-border disputes across many sectors and industries, with a particular focus on construction/infrastructure and energy disputes. He speaks at conferences and seminars, and lectures at universities and master’s programmes in relation to both arbitration and construction/infrastructure and energy sectors. He regularly publishes on arbitration-related topics. Mr Garcia-Perrote is included in the Arbitrator’s List of the Spanish Civil and Commercial Court of Arbitration and is a Member of the Chartered Institute of Arbitrators, the Spanish Arbitration Club, and the Spanish-Australian Chamber of Commerce. In 2008, his team, representing Universidad Carlos III (Madrid), won the Willem C. Vis International Commercial Arbitration Moot, and he also received an honourable mention for the best individual oralist.

Sandeep Golani joined the National Law University Odisha in 2018 after he developed a keen interest in law. Currently, he is pursuing a BBA and an LLB, and is in the second year of law school. He is also pursuing a Company Secretaryship Course (Executive Programme). His interest areas include commercial and investment arbitration, investment law, corporate law, insolvency and bankruptcy laws and securities law. He has written many articles in these areas. Sandeep was also a student editor for the book, Through the Lens of Maritime Law: A World View, published by the Centre for Maritime Law, National Law University Odisha, in 2020.

Kiran Nasir Gore focuses her practice on US and transnational dispute resolution. She specializes in complex litigation, international commercial and investment arbitration, and global investigations. Her experience spans a variety of industries, including non-profits, luxury goods, medical devices and pharmaceuticals, natural resources, energy, shipping, and transport. She has previously worked as a senior associate in the Washington, DC office of Three Crowns LLP and as an associate in the New York office of DLA Piper LLP. She currently is Counsel in the Law Offices of Charles H. Camp, PC. Kiran also serves as Associate Editor of the Kluwer Arbitration Blog and Associate Editor of the ICSID Review: Foreign Investment Law Journal. She draws on her professional experiences as an educator at the George Washington University Law School and New York University’s Global Study Center in Washington, DC.

Brooke S. Güven is a senior legal researcher at the Columbia Center on Sustainable Investment at Columbia University (CCSI). Her academic and policy work focuses on analysing the contracts, domestic frameworks and international legal arrangements governing cross-border investments, and the impacts that these frameworks have on sustainable development objectives. Prior to joining CCSI, she was a finance lawyer specializing in cross-border transactions at an international law firm, and also worked as a legal advisor with the Liberian Ministry of Health and Social Welfare. She has an LLM from New York University School of Law, where she was a Human Rights Scholar, a JD and MA from the University of Wisconsin, and a BA from Northwestern

University, Illinois.

Margie-Lys Jaime, PhD, FCIArb, is a qualified independent arbitrator and Professor of Law at the University of Panama. She also acts as consultant and expert in commercial, trade and investment matters. Her practice includes international litigation, maritime disputes, commercial arbitration, investor-state dispute settlement, and international trade. Dr Jaime obtained her PhD in Law, with highest honours, and an LLM in International Economic Affairs Law, with honours, both from the University of Paris II (Pantheon-Assas). In addition, she holds an LLM in Arbitration and International Business Law from the University of Versailles (France), and an LLM in International Business and Economic Law with a Certificate in WTO Studies from Georgetown University Law Center, Washington, DC. Dr Jaime is a former trade negotiator for the Republic of Panama, having served as Chief of the Trade in Services and Investments Department at the Ministry of Trade and Industries. She is admitted to practise law in Panama, the State of New York, and holds the Certificate of Aptitude for the legal profession (CAPA) in Paris, France. She is the President of the Mediation and Arbitration Committee of the National Bar Association of Panama (2019–2021).

Marryum Kahloon is an associate in the New York office of Gibson, Dunn & Crutcher LLP, where she is a member of the International Arbitration Practice Group. Ms Kahloon specializes in international arbitration and public international law disputes. She has advised on cases before both the International Court Justice and the European Court of Human Rights. In addition, she has experience advising clients on cases under arbitration rules, including the ICSID, UNCITRAL, SCC, and ICC Rules. Ms Kahloon graduated with an LLM from Columbia Law School in 2018, where she was a James Kent Scholar, a Fulbright Scholar, and recipient of the Edwin Parker Prize for excellence in the study of international law. She earned her Bachelor of Laws degree, summa cum laude, from Bond University, Australia, where she was a Vice Chancellor’s Scholar. She was also the judicial clerk to the Honorable Margaret McMurdo, AC, President of the Court of Appeal of Queensland. Ms Kahloon is admitted to practise in the State of New York, and in Queensland, Australia.

Karl M.F. Lockhart is an associate specializing in international investigations and disputes at a global law firm. Twice seconded to the firm’s Singapore office for matters in South and Southeast Asia, he also has extensive experience in Africa, having worked on development projects in Tanzania, interned at the World Bank in South Africa, and researched human rights issues in Zambia. He was elected to the Order of the Coif at the University of Virginia School of Law, where he received the Monroe Leigh Fellowship in International Law and was a member of the Virginia Law Review. His articles have been published in the Virginia Law Review, the Boston College Law Review, and the Georgetown Journal of International Law.

Annette Magnusson is the Secretary General of the Arbitration Institute of the SCC since 2010. She joined the SCC from the law firm Mannheimer Swartling in Stockholm and before that Baker & McKenzie, Sweden. Ms Magnusson is the author or editor of several publications on international arbitration, including Arbitrating for Peace (Kluwer, 2017) and International Arbitration in Sweden (Kluwer, 2013), and the producer of the documentary The Quiet Triumph (2017), a film about interconnection between economic development, arbitration and peace. She is the founder of the Stockholm Treaty Lab, an international crowdsourcing challenge to innovate international law for climate change mitigation and adaptation, and a frequent speaker on sustainability and arbitration, including addressing Climate Change and Arbitration at the 24th ICCA Congress in Sydney in 2018. Ms Magnusson is listed as a Thought Leader and Global Leader in Who’s Who Legal.

Brian McGarry is Assistant Professor of Public International Law at the Grotius Centre for International Legal Studies, Institute of Public Law, at the Faculty of Law of Leiden University, the Netherlands. He previously was Lecturer in International Dispute Settlement at the Graduate Institute of International and Development Studies, Switzerland. He received his PhD, summa cum laude, from the University of Geneva, which awarded him the Prix Bellot for best thesis in law or political economy in December 2019. A member of the New York Bar, he has consulted with States and intergovernmental organizations on a range of legal matters involving international trade and investment. He is a national of Ireland and the United States.

Kinda Mohamadieh is a legal advisor and senior researcher with the Third World Network office in Geneva. Her work covers WTO processes and negotiations, international investment governance and issues pertaining to business and human rights. Previously, she served as senior researcher for seven years with the intergovernmental organization, the South Centre, also based in Geneva. She also worked for nine years with the Arab NGO Network for Development, based in Beirut. Kinda holds an LLM in International Economic Law from the University of Lausanne, Switzerland, a master’s in Public Affairs from the University of California in Los Angeles, and an undergraduate degree in Economics. She is currently a PhD candidate at the international law department of the Graduate Institute in Geneva.

Mohamed H. Negm is State Counsel for Arbitration and International Dispute Resolution at the Egyptian State Lawsuits Authority, Ministry of Justice. He represents the interests of Egypt before international courts and arbitral tribunals in international investment arbitrations. He is currently representing the State of Egypt in nine investment arbitration cases before the International Centre for Settlement of Investment Disputes. He has handled many complex, high value, commercial institutional and ad hoc arbitral proceedings involving parties from the Middle East, Europe, Asia, and the United States under the rules of leading arbitral institutions such as the ICC, CRCICA, UNCITRAL, LCIA, and DIAC. Mr Negm has been appointed by the African Union as an Expert Consultant on the Pan African Investment Code. He is the Assistant Editor of Kluwer Arbitration Blog for Middle East and North Africa. He is the Institute for Transnational Arbitration Reporter for Egypt and OHADA. Mr Negm was selected by the Association of Young Arbitrators as one of Africa’s fifty Most Promising Arbitration Practitioners in 2020. He lectures on Arbitration Law and International Dispute Resolution in the American Bar Association Rule of Law Initiative. Mr Negm was the regional representative of LCIA-YIAG for the Middle East and North Africa. He is a founding member of the Steering Committee of the Young Arab Arbitrators Forum. Mr Negm regularly publishes in international journals on issues of international law, international investment and commercial arbitration.

Srilal M. Perera, PhD, is retired Adjunct Professor of Law of the Washington College of Law of the American University, Washington, DC, where he taught a course on International Law of Foreign Investment and conducted an Advanced Research Seminar in International Investment Law from 2000 to 2018. Professor Perera is also a Fulbright Senior Specialist in Law. He served as Chief Counsel of the Multilateral Investment Guarantee Agency of the World Bank Group, until his retirement in 2010. Professor Perera also served as Legal Counsel at the Iran-United States Claims Tribunal in The Hague from 1986 to 1989. He is on the Panel of Arbitrators and Conciliators of the International Centre for the Settlement of Investment Disputes and a member of the Panel of Arbitrators of the Thailand Arbitration Center. Professor Perera holds an LLB from the University of Colombo, Sri Lanka, a JD-equivalent certification from the Sri Lanka Law College and qualified to practise as an attorney-at-law in Sri Lanka, an MA from the School of Advanced International Studies of the Johns Hopkins University, US, and a PhD from Georgetown University in Washington DC. He has several publications to his credit on various subjects directly concerning ISDS.

Relja Radovic´, PhD, received his PhD in Law from the University of Luxembourg. He also has a LLM (Adv) from Leiden University, the Netherlands and a LLM and a LLB (Hons) from the University of Novi Sad, Serbia. He has assisted with cases before the International Court of Justice, the International Criminal Tribunal for the former Yugoslavia and in international commercial arbitration. His research focus is international adjudication, jurisdiction of international courts and tribunals, investment treaty arbitration, judicial and arbitral law-making, and judicial and arbitral decision-making processes in international law. He has published on these topics in, among others, the Journal of International Dispute Settlement and the Journal of World Investment & Trade.

Ankita Ritwik is a senior associate in the Washington, DC office of Gibson, Dunn & Crutcher LLP and is a member of the Litigation and International Arbitration Practice Groups. Ms Ritwik has represented individuals and multinational companies with investments in Europe, Latin America, Asia and Africa in the real estate, energy, manufacturing and mining industries in international arbitration and enforcement proceedings. Ms Ritwik earned her Law degree cum laude in 2013 from Harvard Law School, Cambridge, US, where she was the Notes Editor for the Harvard International Law Journal. She graduated with honours from Yale University, New Haven, US, in 2007.

Victoria Shannon Sahani is Associate Dean of Faculty Development and Professor of Law at Arizona State University Sandra Day O’Connor College of Law in Phoenix, Arizona. She is also Director of the Faculty Inclusion Research for System Transformation, a university-wide initiative at Arizona State University. Prior to academia, she served for five years as Deputy Director of Arbitration and ADR in North America for the International Court of Arbitration of the International Chamber of Commerce (ICC) in New York. She is currently Vice Chair of the Academic Council of the Institute for Transnational Arbitration, Vice Chair of the Academic Subcommittee of the United States Council for International Business Arbitration Committee and a Member of the ICC Commission on Arbitration and ADR. She formerly served as a member of the Executive Council of the American Society of International Law and a member of the ICCA-Queen Mary Task Force on Third-Party Funding in International Arbitration. She also regularly serves as a consultant and an expert witness regarding third-party funding and arbitration issues. In addition to publishing numerous articles, essays and book chapters, Professor Sahani published the second edition of her coauthored book, Third-Party Funding in International Arbitration (Kluwer, 2017), with Lisa Bench Nieuwveld. She earned her undergraduate and law degrees from Harvard University and is licensed to practise law in New York and the District of Columbia.

Rose Maria Sebi is currently pursuing BBA and LLB degrees at the National Law University Odisha in India and is in the third year of law school. Her areas of interest include international commercial arbitration law and investment arbitration law. She has authored articles on commercial arbitration in India. She has also participated in moot court competitions, including a competition on international commercial arbitration where her team finished as quarter-finalist and was adjudged the team with the ‘best written submissions for the respondent’. She has previously interned with lawyers and at law firms practising domestic and international commercial arbitration.

Ameyavikrama Thanvi is an Indian lawyer who practises at the Supreme Court of India. Her areas of interest include constitution law, public international law and investment treaty arbitration. She has appeared before two separate Constitution Benches of the Supreme Court of India that dealt with interpretation of the provisions concerning trade and commerce in the Constitution of India and the Arbitration and Conciliation Act, 1996. She has also acted as tribunal secretary in a number of domestic commercial arbitrations. In 2019, she received her LLM with distinction and with mention on the Dean’s List from Georgetown University Law Center, Washington, DC, where she specialized in international arbitration and dispute resolution, focusing her studies on international investment arbitration. She worked as rapporteur for the white paper submitted by the International Law Institute to UNCITRAL Working Group III, which is mandated to work on reforms in ISDS. She previously has written articles on a variety of issues in domestic as well as international law.

Herman Verbist, PhD, is an attorney at the Ghent and Brussels Bar in Belgium with Everest Attorneys. He is an accredited mediator in civil and commercial matters by the Federal Mediation Commission in Belgium. He worked as counsel at the Secretariat of the International Court of Arbitration of the International Chamber of Commerce in Paris (1988–1996). He has taught, as visitor professor, the course on International Commercial Arbitration at the University of Ghent, Belgium. Since 2016, he is the President of the arbitrators of the Belgian Court of Arbitration for Sport. For many years, he has attended the sessions of UNCITRAL Working Group II. Dr Verbist recently taught a course entitled, ‘Case Study Investment Mediation’ at the Europa-Institut of Saarland University, Saarbrücken, Germany.

Ella Wisniewski is a senior associate, based in the Perth office of Herbert Smith Freehills. She obtained her Master of Laws in International Dispute Resolution from Humboldt University, Berlin, with a focus on international commercial arbitration, investor-state dispute settlement, and cross-border litigation. She has acted for clients in international commercial arbitrations, both institutional and ad hoc, and in an investor-state arbitration administered by ICSID. She advises clients on the resolution of disputes arising out of major construction and infrastructure projects, as well as within the energy, mining and resources sectors. In 2018, she was awarded third place in the Nappert Prize in International Arbitration, for her paper, which was subsequently published in the ICC Dispute Resolution Bulletin (Issue 4, 2018). Ella was also awarded ‘best oralist’ for defending her paper before a panel of preeminent arbitration practitioners and academics at the Nappert Prize Symposium, hosted by McGill University in Montreal. In 2020, Ella was included in the Australasian Lawyer Rising

Stars list.

Shahrizal M. Zin, PhD, FCIArb, FAIADR, FMIARB is a legal academic and alternative dispute resolution practitioner. He is an Advocate and Solicitor of the High Court of Malaya. He is an arbitrator and adjudicator empaneled at the Asian International Arbitration Centre. He is a mediator accredited by the Bar Council Malaysian Mediation Centre. His areas of expertise include domestic and international dispute resolution with specific reference to construction law, international commercial arbitration, investment treaty arbitration and international trade matters. He graduated with an LLB (Hons) and LLM from the University of Malaya, Malaysia. He holds a PhD from Monash University, Australia. He was awarded a diploma in International Commercial Arbitration from the Chartered Institute of Arbitrators and admitted as a Fellow since 2016. He is also a Fellow of the Asian Institute of Alternative Dispute Resolution and the Malaysian Institute of Arbitrators. He is currently acting as a senior lecturer at the Faculty of Law, University Technology MARA, Malaysia. He serves as a visiting lecturer of the Faculty of Law, Airlangga University, Surabaya, Indonesia. He sits regularly as an arbitrator and adjudicator in relation to construction disputes pursuant to the Arbitration Act (2005) Malaysia and Construction Industry Payment and Adjudication Act 2012.

Summary of Contents

Editors	v
Contributors	vii
Acknowledgements	xxxi
Foreword Introduction	xxxiii
Alan M. Anderson & Ben Beaumont CHAPTER 1 Bringing Consistency to Investment Arbitration: Challenges and Reform Proposals	1
Ameyavikrama Thanvi CHAPTER 2 ISDS Reform in the EU: Are We There Yet?	9
Venetia Argyropoulou CHAPTER 3 The Path of (Re)volution of the International Investor-State Dispute Settlement Regime: A Case Study of Bosnia and Herzegovina	33
Fahira Brodlija CHAPTER 4 The 2015 India Model BIT and Its Suitability under ISDS	55
Rose Maria Sebi, Sandeep Golani & Pallab Das	77

Summary of Contents

CHAPTER 5

Chronicles of Middle East in Investor-State Arbitration: Autopsy of Prevalent Practice Trends and Future Epidemic Challenges
Mohamed H. Negm CHAPTER 6 The Rise of NAFTA 2.0: A Case Study in Effective ISDS Reform	95
Kiran Nasir Gore & Charles H. Camp CHAPTER 7 Reshaping Investor-State Dispute Settlement Through an Appellate Review Mechanism	119
Margie-Lys Jaime CHAPTER 8 Arbitrator-Made (Jurisdictional) Law in Investment Treaty Arbitration: Application, Creation and Control	137
Relja Radovic´ CHAPTER 9 State Responsibility for Acts of State-Controlled Entities in Investor-State Dispute Settlement	157
Srilal M. Perera CHAPTER 10 Striking Back: An Investor’s Right to Confront Its Home State’s Decision to Terminate Investment Protection Agreements	175
Anthony R. Daimsis CHAPTER 11 Reappraising Access to Justice in ISDS: A Critical Review on State Recourse to Counterclaim	201
Shahrizal M. Zin CHAPTER 12 Time for a Clean Energy Charter Treaty? Examining the Role of ISDS in Promoting and Protecting Renewable Energy Investments	225
Guillermo Garcia-Perrote & Ella Wisniewski CHAPTER 13 Addressing Financial Access to Justice in Investment Treaty Arbitration	247
Victoria Shannon Sahani	271

xviii

Summary of Contents

CHAPTER 14

Regulating Third-Party Funding in Investor-State Arbitration Through Reform of ICSID and UNCITRAL Arbitration Rules: Holding Global Institutions to Their Development Mandates
Brooke S. Güven, Frank J. Garcia, Karl M.F. Lockhart & Michael R. Garcia CHAPTER 15 Alternatives to Arbitration in Reforming Investor-State Dispute Settlement	287
Kinda Mohamadieh CHAPTER 16 Mediation as a Method to Settle International Trade and Investment Disputes	319
Herman Verbist CHAPTER 17 The Duty to Mitigate: A Billion Dollar Mystery of General Principles of Law	341
Kai-chieh Chan & Chuanyu Fan CHAPTER 18 Challenges in Quantifying Damages: Are Damages Getting the Treatment They Deserve by Investor-State Tribunals?	369
Ahmed Abdel-Hakam CHAPTER 19 Improving Post-award Efficiency: Proposed Reforms to the ICSID Annulment Process	387
Ankita Ritwik & Marryum Kahloon CHAPTER 20 Enforcement of Investment Court Decisions under the New York Convention: A Search for Defining Elements	409
Brian McGarry	451
Index	473

Editors v

Contributors vii

Acknowledgements xxxi

Foreword xxxiii

Introduction

Alan M. Anderson & Ben Beaumont 1

CHAPTER 1

Bringing Consistency to Investment Arbitration: Challenges and Reform

Proposals

Ameyavikrama Thanvi 9

1.01 Introduction 9
1.02 The Consistency and Coherence Debate: What Is at Stake 10
Consistency 11
Coherence 11
Predictability 12
Correctness of Decision 12
1.03 Inconsistency and Incoherence in International Investment

Arbitration 13

[A] Different Kinds of Unjustified Inconsistencies 14

Varying Interpretations of Provisions of the Same Treaty 14
Divergent Interpretation of Procedural Issues 16
Varying Interpretations of Substantive Treaty Standards 18
- Fair and Equitable Treatment 18
- Umbrella Clause 20
- War Clause 21
- 1.04 Impact of Inconsistency in Investment Arbitration 21
- 1.05 Proposals to Address Inconsistency in Investment Arbitration 23
Tailoring Individual IIA 25
Introducing a System of Precedent 25
Prior Scrutiny of Award 27 [D] Appellate Mechanism 29

[E] Creating an International Court System 30

1.06 Conclusion 31

CHAPTER 2

ISDS Reform in the EU: Are We There Yet?

Venetia Argyropoulou 33

2.01 Introduction 33
2.02 The Achmea Ruling and Opinion 1/17 34 [A] Background of the Cases 34 [B] The Reasoning of the CJEU 35

[C] Where Do We Stand? 41 [1] Intra-EU BITs 41

Extra-EU BITs 45
FTAs and International Investments Agreements 48
2.03 Multilateral Investment Court 50
2.04 Conclusion 52

CHAPTER 3

The Path of (Re)volution of the International Investor-State Dispute Settlement Regime: A Case Study of Bosnia and Herzegovina

Fahira Brodlija 55

3.01 Introduction 56
3.02 ISDS Reform at the Global Level: UNCITRAL WG III 57
Reform Options for Consistency, Correctness and Predictability of the Interpretation of Treaties and Principles of International

Law 58

Reform Options for Independence and Impartiality of the

Arbitrators and Decision-Makers, Diversity and Transparency in

ISDS 61

Reform Options for Cost and Duration of ISDS Proceedings 63 §3.03 ISDS at the Regional Level: EU Perspective Post-Achmea 64
3.04 ISDS Reform at the National Level: The Case of BiH 66 [A] The Existing ISDS Framework in BiH 66 [B] The Future of ISDS in BiH as an EU Member State 67 [C] ISDS Reform Options for the Surviving BiH BITs 70
ISDS Reform in BiH: Spotlight on Dispute Prevention and ADR 71 [E] Structured and Effective Amicable Settlement Provisions

(Consultations, Negotiations, Mediation) 72

[F] Institutional Framework for Amicable Settlement Proceedings:

Best Practices from Brazil and BiH 73

Cooperation and Facilitation Investment Agreement in

Brazil 73

Permanent Negotiating Body for the Peaceful Settlement

of International Investment Disputes in BiH 74

3.05 Conclusion 75

CHAPTER 4

The 2015 India Model BIT and Its Suitability under ISDS

Rose Maria Sebi, Sandeep Golani & Pallab Das 77

4.01 Introduction 77
4.02 Dispute Resolution and Exhaustion of Local Remedies 78
Investment Arbitration in India under the 2003 India Model BIT 78
Investment Regime Change in India 82
Response to 2015 India Model BIT 85
4.03 Exclusion of MFN Clause from the 2015 India Model BIT 87 [A] Importation of MFN Clauses for Dispute Resolution 87

[B] Suitability of MFN Clause in India’s Current Investment Regime 89

4.04 Should India Be a Member of the ICSID? 92
4.05 Conclusion 94

CHAPTER 5

Chronicles of Middle East in Investor-State Arbitration: Autopsy of Prevalent Practice Trends and Future Epidemic Challenges

Mohamed H. Negm 95

5.01 Introduction 95
5.02 Evolution of Investment Treaties and ISDS Provisions in the Middle

East 97

First Generation Treaties: A Perilous Path to Pass 97 [1] Substantive Rights and Guarantees 98 [2] Procedural Rights and Guarantees 100
Transformation of the Treaties Signed by Middle East States 102
5.03 Framework of Investor-State Arbitration in the Middle East 105 [A] Impact of the Arab Spring on Investment Arbitration Landscape 105
Investment Arbitration under Middle East Multilateral Treaties 106
- Unified Agreement for the Investment of Arab Capital in

the Arab Countries 106

Ad Hoc Arbitration: Al Kharafi v. Libya 107
The AIC 108

Agreement on Promotion, Protection and Guarantee of Investments Among Member States of the Organization of

the Islamic Conference 110

Prevalent Issues of ISDS Claims in the Middle East 111
- Interest and Lost Profits under the Laws of Middle Eastern

States 111

Consolidation and Consistency: Orascom and OTH Cases

Against Algeria 112

Enforcement of Investment Arbitration Awards 113
5.04 Positions and Contributions of Middle East States for ISDS Reform 114

Investment Disputes Prevention Policies 114
Contributions of Middle East States to ISDS Reform 114
5.05 Conclusion 117

CHAPTER 6

The Rise of NAFTA 2.0: A Case Study in Effective ISDS Reform

Kiran Nasir Gore & Charles H. Camp 119

6.01 Introduction 119
6.02 NAFTA: Historic Context and Features of Its Chapter 11 ISDS

Mechanism 122

[A] NAFTA’s Context and Objectives 123 [B] NAFTA’s Chapter 11 ISDS Mechanism 124

NAFTA: General Experiences under and Criticisms of Chapter

11 125

Experiential Reality: NAFTA Claims Pursued Against the US and

Canada 126

[1] Loewen Group, Inc. et al. v. United States 127 [2] Methanex Corporation v. United States 128 [3] Eli Lilly and Company v. Canada 129

[4] Relevant Observations 129

6.03 The Rise of USMCA and Key Revisions Within Its Chapter 14 130
Social, Economic, and Political Context for USMCA’s

Development 131

USMCA’s Chapter 14 and Noteworthy Shifts 131
6.04 Conclusion: Framing USMCA’s Development Within the Global ISDS

Debate 134

CHAPTER 7

Reshaping Investor-State Dispute Settlement Through an Appellate Review Mechanism

Margie-Lys Jaime 137

7.01 Introduction 137
7.02 Advantages and Disadvantages of an Appellate Review Mechanism 139
Advantages Vis-à-Vis Annulment 139
Advantages Vis-à-Vis a Multilateral Investment Court 142
Disadvantages of a Multilateral Court of Appeal 144
7.03 Nature and Scope of an ISDS Appellate Body 144 [A] Nature of the Appeal Mechanism 145

[B] Grounds for Appeal 146

7.04 Composition and Structure of an ISDS Appellate Body 148 [A] Re-edifying the Selection and Appointment Process: Roster

Versus Standing Body 149

Standing or Permanent Appellate Body 149
Semi-Standing or Roster Model 150
Qualifications, Diversity, Independence and Impartiality 151
Remuneration 152
7.05 Options for establishing an Appellate Review Mechanism 154
The Treaty-Specific Approach 154
The Multilateral Alternative 155
7.06 Conclusion 156

CHAPTER 8

Arbitrator-Made (Jurisdictional) Law in Investment Treaty Arbitration:

Application, Creation and Control

Relja Radovic´ 157

8.01 Introduction 158
8.02 Arbitrator-Made Jurisdictional Rules 159
8.03 Application 162 §8.04 Creation 165 §8.05 Control 169
8.06 Conclusion 172

CHAPTER 9

State Responsibility for Acts of State-Controlled Entities in Investor-State Dispute Settlement

Srilal M. Perera 175

9.01 Introduction 176
9.02 Antecedents to the 2001 DARSIWA 177
Belgium v. Spain (Barcelona Traction) 177
Trendtex Trading Corporation v. Central Bank of Nigeria 178 [C] Jurisprudence of the Iran–United States Claims Tribunal 180

[D] Emilio Maffezini v. Kingdom of Spain 185

9.03 The 2001 DARSIWA 187
9.04 Post-2001 DARSIWA Adjudication in ISDS: Selected Decisions 190
9.05 Conclusion 197

CHAPTER 10

Striking Back: An Investor’s Right to Confront Its Home State’s Decision to Terminate Investment Protection Agreements

Anthony R. Daimsis 201

10.01 Introduction 201
10.02 Setting the Stage 204
State Obligations Intended to Induce Investment 205
The Promise to Arbitrate 205
IIA Building Blocks 206

§10.03	Do Investors Benefit from Rights or Merely Privileges?	207
	[A] The Sugar Cases	207
	[1] ADM	207
	[2] CPI	208
	[3] Cargill	209
	[B] Evaluating the Sugar Cases	210
	[C] Rights and Duties	210
	[D] Substantive Versus Procedural Rights: A False Dichotomy	211
	[E] Lex Arbitri	212
	[F] Seat Theory	213
	[G] Contractual Aspect of Arbitration Agreements	214
§10.04	Third-Party Rights	215
	[A] Third-Party Beneficiaries under the Common Law and Civil Law	216
	[B] The Second Restatement of the Law of Contracts	216
	[C] Third-Party Beneficiaries under Civil Law	216
	[D] Third-Party Beneficiaries as General Principles of Law [E] Transposing the General Principle of Third-Party Beneficiaries	217
	to IIAs	219
§10.05	Investors Are Owed Duties, Which Translate into Rights	221
	[A] Separability	221
§10.06	Conclusion	223
CHAPTER 11 Reappraising Access to Justice in ISDS: A Critical Review on State Recourse to Counterclaim		223
Shahrizal M. Zin		225
§11.01 Introduction		226
§11.02 What Does a Counterclaim Promote?		226
§11.03 A Legal Basis for a State to Assert Counterclaims §11.04 Extending Tribunal’s Jurisdiction: A Close Connection Test for		227
Admissibility of a Counterclaim		227
§11.05 The Requirement of Express Consent in the BIT		232
§11.06 Sources of the Investor’s Obligations		234
§11.07 Unilateral Character of BITs		235
§11.08 Substantive and Procedural Non-compliance		239
§11.09 Enhancing the State’s Access to Justice: A Way Forward		240
§11.10 Conclusion CHAPTER 12 Time for a Clean Energy Charter Treaty? Examining the Role of ISDS in Promoting and Protecting Renewable Energy Investments		244
Guillermo Garcia-Perrote & Ella Wisniewski		247
§12.01 Introduction		248
§12.02 Context		249
§12.03 Regulatory and Political Risk in the Renewable Energy Sector		250

	[A] The Need for Further Investment in Low-Carbon Energy [B] The Ongoing Need for Supportive, Stable Political and	250
	Regulatory Conditions	252
§12.04	The ECT and Investments in the Renewable Energy Sector	253
	[A] Background to the ECT [B] How Does the ECT Protect Renewable Energy Investments from	253
	Adverse Regulatory and Political Changes? [C] The Interpretation of Available Protections in Cases Involving	253
	Renewable Energy Investments	258
§12.05	The Ability of the ECT to Promote the Inflow of Foreign Capital and
	Technology in the Field of Renewable Energy	262
§12.06	Modernization of the ECT	264
	[A] Common Criticisms of the ECT [B] Could Criticisms of the ECT Be Addressed with Improved	264
	Drafting?	265
§12.07	The Likelihood of Further Withdrawal from the ECT	268
§12.08	Conclusion	269
CHAPTER 13 Addressing Financial Access to Justice in Investment Treaty Arbitration		269
Victoria Shannon Sahani		271
§13.01 The Structural Problem in ISDS		271
§13.02 Classic Third-Party Funding in ISDS		273
§13.03 Not-for-Profit Third-Party Funding in ISDS		277
§13.04 Proposals for Financial Access to Justice in ISDS		279
§13.05 Conclusion CHAPTER 14 Regulating Third-Party Funding in Investor-State Arbitration Through Reform of ICSID and UNCITRAL Arbitration Rules: Holding Global Institutions to Their Development Mandates		285
Brooke S. Güven, Frank J. Garcia, Karl M.F. Lockhart & Michael R. Garcia		287
§14.01 Introduction		288
§14.02 The Nature of TPF in ISDS and the Objectives of TPF Regulation		290
[A] What Is TPF?		290
[B] How Is TPF Used in ISDS?		291
[C] What Are the Objectives of TPF Regulation?		292
§14.03 What Is Required to Effectively Restrict or Regulate TPF in ISDS?		299
[A] Treaty-Based TPF Reform		299
[1] New and Future Treaties		299
[2] Existing Treaties [B] Restricting or Regulating TPF Through Reform of Arbitration		301
Rules		302
[C] Additional Considerations Related to Domestic Law		304
§14.04 ICSID and UNCITRAL Rule Reform as a Priority		307

[A] Why ICSID and UNCITRAL and Why Now?		307
[B] ICSID Rule Reform		308
[C] UNCITRAL Arbitration Rules Reform		312
[D] Reform of Other Arbitration Rules		315
§14.05 Conclusion CHAPTER 15 Alternatives to Arbitration in Reforming Investor-State Dispute Settlement		316
Kinda Mohamadieh		319
§15.01 Introduction §15.02 Alternatives to Arbitration in State Practices Pertaining to Settling		319
Investment Disputes		320
§15.03 Discussions at UNCITRAL: The Context		322
§15.04 Discussions at UNCITRAL: The Proposed Reforms [A] Mediation and Conciliation: The Current Practice, Prospects and		324
Potential Challenges [B] Domestic Courts, Their Interface with Arbitration and Their		326
Role as an Alternative		329
[C] State-to-State Mechanisms for Investment Dispute Settlement		335
§15.05 Conclusion CHAPTER 16 Mediation as a Method to Settle International Trade and Investment Disputes		338
Herman Verbist		341
§16.01	Introduction	341
§16.02	Mediation in International Trade Disputes	342
	[A] Statistics on ICC Mediations	342
	[B] From Arbitration to Mediation Proceedings	345
§16.03	UNCITRAL Mediation Instruments [A] The Model Law on International Commercial Mediation and International Settlement Agreements Resulting from Mediation	346
	2018	347
	[B] The Singapore Convention	348
	[C] UNCITRAL Mediation Rules	351
	[D] UNCITRAL Notes on Mediation	352
	[E] UNCITRAL WG III on Possible ISDS Reform	353
§16.04	Mediation and Conciliation in Investment Disputes	356
	[A] ICSID Rules	356
	[B] Statistics on ICSID Conciliations	357
	[C] Conduct of an ICSID Convention Conciliation	358
	[D] Proposal for New ICSID Mediation Rules	359
	[E] Mediation Provisions in Investment Treaties	361
	[F] Permanent Court of Arbitration	362
	[G] Stockholm Chamber of Commerce	362

[H] International Chamber of Commerce		363
[I] IBA Rules for Investor-State Mediation		363
§16.05 Conclusion CHAPTER 17 The Duty to Mitigate: A Billion Dollar Mystery of General Principles of Law		364
Kai-chieh Chan & Chuanyu Fan		369
§17.01 Introduction		369
§17.02 The Duty to Mitigate in Domestic and Transnational Laws		371
[A] General Principles of Law: A Methodological Note		372
[B] The Duty to Mitigate: A General Principle of Law?		373
[C] The Standard of Due Diligence Required in Mitigation		376
§17.03 The Duty to Mitigate in International Investment Arbitration		379
[A] Preliminary Issue: Mitigation as Liability or/and Quantum? [B] The Standard of Due Diligence in Mitigation in International		380
Investment Law [C] Reforms and Related Appeal Mechanisms: The Way Forward		381
for More Clarity on the Duty to Mitigate?		383
§17.04 Conclusion CHAPTER 18 Challenges in Quantifying Damages: Are Damages Getting the Treatment They Deserve by Investor-State Tribunals?		385
Ahmed Abdel-Hakam		387
§18.01	Introduction	388
§18.02	The Scope of an Arbitral Tribunal’s Power to Award Damages	389
	[A] Legal Basis for the Tribunal’s Power to Award Damages	389
	[1] International Investment Agreements	389
	[2] Customary International Law [a] ILC’s Articles on Responsibility of States for	391
	Internationally Wrongful Acts	391
	[b] Jurisprudence of International Courts and Tribunals	393
	[c] Resolutions of the UN General Assembly	394
	[3] General Principles of Law	395
	[4] Body of Case Law of International Tribunals [B] Are Arbitral Tribunals Obliged to Justify Their Award of	396
	Damages?	397
§18.03	Weaknesses of the Current System	398
	[A] Inflation of Claims	398
	[B] Lack of Sufficient Reasoning [C] Perception of Unfair and Unrealistic Compensation: The Case of	398
	Tethyan v. Pakistan	399
	[D] Are Arbitrators Well-Equipped to Handle Valuation?	402
§18.04	Proposed Way Forward	402

[A] Increase the Use of Tribunal-Appointed Experts [B] Is the Answer in US Court Litigation? The Example of Appraisal	403
Litigation in the State of Delaware	404
[C] Institutional Proposals for Reform	406
§18.05 Conclusion CHAPTER 19 Improving Post-award Efficiency: Proposed Reforms to the ICSID Annulment Process	407
Ankita Ritwik & Marryum Kahloon	409
§19.01 Introduction	409
§19.02 Overview of the Post-award Regime	410
[A] Supplementation, Rectification, Interpretation, and Revision	410
[B] Annulment	413
§19.03 Contemporary Issues	417
[A] Annulment-Related Delays	417
[B] Impact on Enforcement	419
§19.04 Enhancing Post-award Efficiency [A] Encourage Use of Post-award Remedies Other Than Annulment	421
under the ICSID Convention	421
[B] Impose and Enforce Time Limits on the Annulment Process	422
[C] Socialize the Limited Scope of Post-award Remedies	424
[D] Use of ICSID Arbitration Rule 41(5)	425
§19.05 Conclusion	426
Annex Decisions on Annulment CHAPTER 20 Enforcement of Investment Court Decisions under the New York Convention: A Search for Defining Elements	428
Brian McGarry	451
§20.01 Introduction	452
§20.02 Enforcement and the Terms of the New York Convention	453
[A] Requirement of a ‘Foreign’ Award	454
[B] Requirement of an ‘Agreement in Writing’	458
§20.03 Comparison to WTO Arbitration	461
[A] Systemic Considerations	462
[B] Specific Forms of WTO Arbitration	465
§20.04 Conclusions	469
Index	473

Acknowledgements

The genesis of this volume was the editors’ participation as representatives of the Forum for International Conciliation and Arbitration at the sessions of UNCITRAL Working Group III in New York City and Vienna, when the Working Group took up the topic of reform of the investor-State dispute settlement (ISDS) system. We were struck by the intensity and diversity of the debates surrounding the issues raised on the fundamental question of whether to reform or replace the ISDS system, and whether any changes practically are feasible, possible or even should be made – hence the title of this book.

We independently reached the same conclusion: that a book that presents a variety of views on the issues regarding the ISDS system would be a welcome and useful contribution to the on-going discussions. The editors at Kluwer Law International welcomed our suggestion and readily accepted our proposal. We were gratified by the number and quality of the proposals received from potential contributors, which made the final selections difficult. We were able to choose contributions addressing most of the key topics regarding ISDS reform, from authors located literally around the world representing diverse points of view drawn from academia, practitioners, government, and those focused on special interest topics.

All the contributors have worked hard to meet the demands we have placed on them, especially in light of the world-wide COVID-19 pandemic. It has been a pleasure working with them, and we thank them for their efforts. The quality and significance of this volume is due to their contributions. We must also extend special thanks to the wise and thoughtful guidance provided by our editors at Kluwer Law International. They have been a pleasure to work with from start to finish. Jonathan Blaney deserves thanks for his assistance in organizing the chapter contributions. Great thanks and appreciation must also be extended to Annette Magnusson, the Secretary General of the Arbitration Institute of the Stockholm Chamber of Commerce, who graciously and immediately agreed to write a foreword to this volume.

Acknowledgements

This has truly been a team effort by each of us as editors, and despite periodic differences throughout the process, neither of us could have done this alone. Finally, we accept responsibility for any errors or omissions that may inadvertently exist in this volume.

Alan M. Anderson

Ben Beaumont July 2020

Foreword

On 6 April 2014, at the 23rd biannual Congress of the International Council for Commercial Arbitration (ICCA), Stephen M. Schwebel, former Judge and President of the International Court of Justice, delivered a keynote speech placing international investment arbitration in a historical context. It was an important contribution to the discussion on Investor-State Dispute Settlement (ISDS), adding a big-picture perspective at a time when different views appeared pre-destined to crouch in their respective trenches. But as the saying goes: ‘if you do not know where you come from, then you probably don’t know where you are going’.

Since 1959, States have entered into over 3,000 bilateral treaties for the purpose of protecting foreign investments. A majority of these treaties provide for arbitration between investors and the State in a situation of potential breach of the investment protection provisions of the treaty. And by the end of 2019, a global total of 1,023 investor-State cases were known to have been filed.^[1]

The inclusion of international arbitration in bilateral investment agreements represents what some would call a revolutionary development in international law. Judge Schwebel, in his remarks, referred to it as ‘one of the most progressive developments in the procedure of international law of the last fifty years, indeed in the whole history of international law’.^[2] Among other things, it confirms that not only States could be the subject of international law, reflecting a general development of international law, as seen also in international human rights.

The inherently evolutionary character of international law has thus brought us ISDS, a relatively young system for resolving disputes. A system (actually a false label as it is rather a collection of separate systems than a single system) which is hailed by some, and heavily criticized by others. Where do we go from here?

In Stockholm, the start of the ISDS engagement was the very first treaty-based investor-State arbitration filed at the Arbitration Institute of the Stockholm Chamber of

Foreword

Commerce (SCC) in 1993 under the United Nations Commission on International Trade Law (UNCITRAL) Arbitration Rules. Three years later, the SCC saw the first treatybased case under the SCC Rules.

At that time, treaty-based investor-State arbitration was a relatively unknown creature in the fauna of international arbitration. Now of course things are different. Since the early cases in the 1990s, the Stockholm trajectory of investor-State arbitration has followed the global trend. With a total of 112 investment arbitration cases^[3] and the SCC Rules being the third most commonly used rules in ISDS cases globally, the SCC is an outlier among international arbitral institutions usually administrating primarily commercial arbitration cases.

Against this background, the SCC has closely followed the debate on ISDS – to feed in our practical experience; to contribute to a fact-based discourse; and always to be prepared to contribute to a constructive dialogue on how to develop and, if needed, improve investor-state arbitration.

The proverb alluding to the importance of a historical context has a continuation: ‘if you do not know where you are going, then you are probably going wrong’.^[4]

Many arguments have been made in recent years that investor-State arbitration has indeed ended up in the wrong place, and that reform is therefore necessary. Some voices assert that this was a futile journey from the very start and that ISDS needs to be replaced with something different. And in parallel to the debate, governments are in the course of negotiating modernized treaties, while new cases are being heard, argued and decided.

It’s complicated.

How to address change in a legal universe like that of ISDS? UNCITRAL approached the issue by delegating the task to its Working Group III in 2017. Working Group III was commissioned to start by identifying issues giving rise to concern, and then follow up by working on reform for each of these issues. Working Group III agreed on three main themes around which the work has since been organized: (i) concerns pertaining to consistency, coherence, predictability and correctness of arbitral awards, (ii) concerns pertaining to arbitrators and decision makers, and (iii) concerns pertaining to the cost and duration of ISDS cases.

While UNCITRAL is addressing only procedural aspects of ISDS, the discussion in the Working Group has however illustrated how difficult it can be at times to separate substance from procedure when evaluating and debating ISDS issues. A myriad of issues needs to be addressed. The task has at times appeared Herculean.

The UNCITRAL Member States have had the benefit of working with a large number of observer delegations, along with external experts representing both academia and the private sector. Together everyone is putting in their best effort to answer the question where ISDS needs to be going in the best possible way.

Foreword

It is against this background that a publication like the one you are currently holding in your hands (or perhaps viewing on your screen) is both timely and important. The authors of this book have each contributed to the map going forward. Whether it takes you as a reader to your preferred place of destination – this is up to you. I, for one, am grateful for all our cartography experts offering their advice on the terrain ahead, where some parts are admittedly quite challenging. But just as the historical context matters, so do the chapters of this book in their capacity as building blocks for the better future we need to be ready to build together.

And speaking of building a better future, in the context of ISDS reform there is one question we must not forget to ask: could investment treaty arbitration be ‘a force for good’ – used to motivate a change of state behaviour to tackle some of our greatest challenges, including climate change? Could ISDS reform potentially pave the way? With global principles for dispute resolution and future investment agreements on the table, adding the perspective of sustainable development could be a tremendous opportunity for governments to contribute to – for example – climate change efforts in a truly meaningful way. Indeed, it is pleasing to see that the perspective is also included in this book.

The debate on ISDS reform needs to continue if we as a global community want to move forward. And move forward we must. Congratulations are therefore due to the authors of this book, who are contributing to the conversation. And I do hope some of its ideas will find a way into the negotiating rooms where the future of ISDS is being carved out.

Annette Magnusson

Secretary General Arbitration Institute of the Stockholm Chamber of Commerce

CHAPTER3

The Path of (Re)volution of the

International Investor-State Dispute

Settlement Regime: A Case Study of Bosnia and Herzegovina

Fahira Brodlija

The idea of reforming the investor-state dispute settlement (ISDS) system has been simmering at the international level over the past decade. The most prominent proponent of a complete overhaul of the ISDS system has been the European Union (EU), whose voice was amplified after the 2018 Achmea decision to the point where they proposed the abandonment of the existing ISDS system and the establishment of a multilateral investment court (MIC), as a standing body dedicated to the resolution of treaty-based disputes. Other countries are more inclined to pursue a gradual, targeted ISDS reform process, building on the existing framework. Bosnia and Herzegovina (BiH), as an aspiring EU Member State and a developing state seeking to attract foreign investments, is caught between these two strong currents. This chapter explores the implications of the ongoing ISDS process and its potential outcome on BiH, by taking a glance into the future of this country as an EU Member State. This chapter addresses the following questions: What reform options are developed and presented at the current stage of ISDS reform? What is the position of the EU and its Member States in the global discussions? How could BiH successfully terminate its intra-EU bilateral investment treaties (BITs) and reform its existing ISDS framework in relations with non-EU states? The chapter concludes with an optimistic view of a possible balanced solution, where BiH would harness its legal and institutional framework to foster dispute prevention and amicable settlement that would be compatible with the approach to ISDS reform in EU and the rest of the world.

3.01

§3.01 INTRODUCTION

The reputation of ISDS as the preferred treaty-based mechanism for the resolution of disputes between investors and host states has been under attack over the past decade. ISDS grew in popularity over time as an acceptable compromise and neutral forum that levels the playing field between investors and states as disputing parties.^[5] It was a healthy alternative to dispute resolution through diplomatic channels or domestic courts, both of which could raise issues of sovereignty of states, and it offered more procedural flexibility and subject-matter expertise of the decision-makers on the arbitral tribunal.^[6] However, with the dramatic increase in the number of ISDS claims and the growing success rate of the investors in arbitration, the voices for systematic reform or total abandonment of ISDS grew louder^[7] based on concerns about the predictability, reliability, efficiency and fairness of the process.^[8]

In Europe, calls for the abolishment of ISDS escalated after the Court of Justice of the European Union (CJEU) reached its landmark decision in Achmea, which declared the ISDS provisions in intra-EU BITs to be contrary to EU law. Soon thereafter, the EU Commission and the EU Member States agreed to embark on the process of terminating intra-EU BITs. Thus, ISDS effectively has no future in the EU.

The discussions on the global stage have been broad and geared at systematic reforms addressing the existing concerns related to ISDS. The most consistent and impactful discussions stem from the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WG III) on ISDS reform, which has a broad mandate to identify concerns and propose reform options for the existing ISDS system.^[9]The discussions and proposals of the WG III are largely government led. The participating states have provided individual and joint submissions on the developed ISDS reform options. An important characteristic of the status quo is the fact that the majority of past ISDS disputes were resolved under the provisions of generation BITs that lack the nuanced regulation of the substantive and procedural issues which are prominent in modern times.^[10] The new-generation BITs have incorporated modern provisions on investor protection and ISDS, which may lead to more satisfactory outcomes in the future. Therefore, significant improvements may be attainable through

§3.02

the modernization of the existing BITs, without abandoning ISDS as a whole. The EU has taken the opposite position, by strongly promoting the abolition of ISDS and the establishment of a standing MIC.

BiH is currently caught in the cross-fires of these global and regional movements. On the one hand, it is aspiring to EU membership; on the other, it is in dire need of reform in its ISDS structure. Namely, the country has faced (and is currently facing) high-value investor claims in International Centre for Settlement of Investment Disputes (ICSID) and ad hoc arbitration. The country has faced significant losses in the aftermath of the previous cases, and only one of the three pending claims is worth EUR 1.5 billion.^[11] Therefore, BiH will certainly have to engage in effective reforms in order to prevent future disputes and to be prepared for proper management of ISDS cases. However, the desire for ISDS reform and its EU aspirations are in tension following the Achmea decision of the CJEU,^[12] following which the EU Member States agreed to terminate all intra-EU BITs, including the ISDS clauses. In this sense, aside from the mandatory termination of intra-EU BITs which BiH will have to comply with upon accession to the EU, it will also have to deliberate the destiny of its surviving BITs with non-EU states.

This chapter seeks to weigh the best ISDS reform options and their viability in the context of BiH, by providing a glance into its future as an EU Member State. The chapter opens with an overview of the ongoing ISDS reforms on the global stage, mainly under the auspices of WG III. It then explores the post-Achmea stance against ISDS in the EU. This chapter then turns to BiH and its existing ISDS system based on its BIT framework. Next, insights into the possible future of BiH as an EU Member State regarding the termination of intra-EU BITs are considered, followed by the reform of the ISDS clauses in the surviving BITs. The conclusion weighs the advantages and disadvantages of the proposed ISDS reform options and their viability in BiH.

§3.02 ISDS REFORM AT THE GLOBAL LEVEL: UNCITRAL WG III

ISDS has been subject to significant criticism and debate during the past decade, which intensified with the increased success rate of investor’s claims against states.^[13] Although there was no proven correlation with the nature of ISDS and a state’s unfavourable outcomes, it was deemed to favour investors and to preclude states from fully defending themselves and presenting their case.^[14]^[15] The comprehensive study and analysis conducted by the United Nations Conference on Trade and Development

(UNCTAD) showed that various countries are taking different approaches in ISDS

§3.02[A]

reform, primarily through treaty renegotiation.^[16] The study showed the diverse ISDS models adopted in the investment treaties concluded in 2018, which ranged from no ISDS provision, reformed ISDS procedure, to a standing investment tribunal.^[17]

Amid the widespread call for a reform of the existing ISDS system, the Secretariat of UNCITRAL tasked WG III with a broad mandate to: (1) identify the most prominent ISDS concerns; (2) determine the need for reform in such areas; and (3) propose viable reform options.^[18] WG III is currently at the third stage, where it is developing and proposing reform options for the identified areas of concern. The entire process is government led, with delegations from all over the world gathering twice a year in Vienna and New York to discuss and propose various options. Between sessions, there are regional and bilateral meetings, where delegations exchange their views and positions.^[19] It is a gradual and systematic process, which is focused on the procedural aspects of ISDS, while the substantive matters remain outside of its scope.

WG III has grouped the major concerns related to ISDS into three main categories:

Consistency, coherence, predictability and correctness of arbitral awards.
Arbitrators and decision-makers.
Cost and duration of ISDS cases (with focus on arbitration proceedings).^[20]

The global ISDS reform discussions within the framework of WG III reflect the diversity and specificity of issues which concern individual nations. The numerous submissions^[21] to the UNCITRAL Secretariat provided by governments reflect their positions on the identified concerns and the reform options which would meet their needs. With the exception of the EU Member States supporting the replacement of the ISDS system with a MIC, most countries favour a pragmatic, targeted approach to ISDS reform, based on the outlined reform framework.

[A] Reform Options for Consistency, Correctness and Predictability of the Interpretation of Treaties and Principles of International Law

The existing ISDS system has been widely criticized for its lack of consistency and predictability because of diverging decisions in concurrent proceedings in which the

§3.02[A]

facts, parties, treaty provisions and applicable arbitration rules were identical.^[22] This is attributed to expansionistic interpretations that are considered to disproportionately favour foreign investors to the detriment of the host states. The critics state that arbitral tribunals do not feel any sense of accountability for the effects of their awards, because they are appointed on an ad hoc basis.^[23] Furthermore, the lack of transparency of arbitral proceedings prevents the creation of a body of case law that would be a reliable resource for arbitral tribunals in the establishment of a credible and legitimate investment arbitration system.^[24]

The EU holds the position that this issue can only be resolved in a systematic manner through the establishment of a MIC. In this standing dispute resolution mechanism, with public proceedings and published awards, the judges would be able to draw from the body of previous decisions of the court in order to maintain a consistent line of interpretation of the most complex international treaties. In addition, the MIC is designed as a two-instance court, which is supposed to create an incentive for the judges to act with care and due diligence in their deliberations and conclusions, in order to avoid having their decisions overturned or remanded on appeal.

However, the issue of inconsistency and unpredictability of arbitral awards can be effectively addressed with targeted reform of the existing ISDS system. One of the most practical reform options is the addition of a mechanism for the exchange of binding treaty interpretations by the treaty parties.^[25] This mechanism is also recognized under the provisions of the Vienna Convention on Vienna Convention on the Law of Treaties.^[26] The availability of treaty interpretation notes provided by the treaty parties would assist the arbitral tribunal in reaching the right conclusions regarding the treaty text, and enhance the consistency and predictability of arbitral awards.^[27]

Another proposal comes from country submissions to WG III,^[28] in the form of an advisory centre for the parties in investment disputes, following the model of the

§3.02[A]

Advisory Centre on World Trade Organization Law (ACWL).²⁴This proposal was also supported by the community of investors’ counsel in their submission to WG III.²⁵The advisory centre, as proposed, could certainly help increase the clarity, consistency and predictability of the ISDS system, providing states (especially least developed states) to prepare for and anticipate potential claims from investors, which will allow them to react in a timely and effective manner. In addition, the advisory role of the centre in any cooling-off period could help mitigate the tensions and provide grounds for early settlement, once the State has a clear picture of the claim and its likelihood of success. The clarity and consistency of treaty interpretation in ISDS could be ensured through a neutral advisory body.

The development of a body of case law in investment arbitration could be accomplished by the adoption of the international standards for transparency in investment. The United Nations Convention on Transparency in Treaty-Based Investor-State Arbitration²⁶(Mauritius Convention) entered into force in 2017. It aims to promote the more widespread application of the UNCITRAL Rules on Transparency in Treaty-Based Investor-State Arbitration.²⁷Under these rules, the submissions, hearings and awards are made available to the public with some exceptions.²⁸The widespread ratification of the Mauritius Convention would turn transparency from an exception to the rule in ISDS proceedings.

Thus far, the Mauritius Convention has been signed by twenty-three states,²⁹and ratified by five. BiH is not among the signatory states of the Mauritius Convention, but the competent ministries are conducting an analysis of its implications to determine the best path forward in this regard.³⁰The lack of guidance in treaty interpretation and inconsistencies in arbitral awards could be overcome through the reform of the existing ISDS framework. Through the application of the Transparency Rules, arbitral tribunals in ISDS proceedings could get useful guidance from previous decisions, and they would be careful in their deliberations with the public eye awaiting their awards. However, the establishment of a precedent system in ISDS would be counterproductive due to the

WP.174, Submission from the Government of Turkey; A/CN.9/WG.III/WP.179, Submission from the Government of the Republic of Korea.

UNCITRAL Secretariat, Note, Possible Reform of Investor-State Dispute Settlement 5–6, https:// undocs.org/en/A/CN.9/WG.III/WP.166.
Submission by the Corporate Counsel International Arbitration Group (CCIAG) to UNCITRALWorking Group III – Investor-State Dispute Settlement (ISDS) Reform, 14 (18 December 2019).
United Nations Convention on Transparency in Treaty-based Investor-State Arbitration,https://www.uncitral.org/pdf/english/texts/arbitration/transparency-convention/Transparen cy-Convention-e.pdf.
UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, https://www.

uncitral.org/pdf/english/texts/arbitration/rules-on-transparency/Rules-on-Transparency-E.pdf.

UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, Art. 7, https://www.uncitral.org/pdf/english/texts/arbitration/rules-on-transparency/Rules-on-TransparencyE.pdf.
The status of the Mauritius Convention is available on the UNCITRAL website, https://uncitral.un.org/en/texts/arbitration/conventions/transparency/status.
Thus far, the Mauritius Convention has been signed by Cameroon, Canada, Gambia, Mauritius,Switzerland.

§3.02[B]

sui generis nature of the subject matter of each dispute and the applicable law.^[29] The fragmented nature of the sources of law underlying each ISDS case, the decentralized regulation, and the complex fact patterns in each dispute are not a formula for the creation of consistent and coherent case law in ISDS.^[30] A system of binding precedent in ISDS would force arbitral tribunals to apply the same reasoning to diverging legal issues, thus forcing a one-size-fits-all solution to otherwise irreconcilable issues. The arbitral tribunals should refer to previous cases to seek common patterns which may lead to the establishment of standards and interpretative tools, which would improve the consistency and coherence of ISDS decisions.^[31] This may be accomplished in the near future, with a more forceful and universal application of the existing framework for transparency in ISDS.

[B] Reform Options for Independence and Impartiality of the Arbitrators and Decision-Makers, Diversity and Transparency in ISDS

The second universally recognized concern is closely connected to the confidentiality of the arbitral proceedings. The criticism is primarily aimed at the lack of information on the appointed arbitrators, disclosure obligations and their potential conflicts of interest, the unspecified terms of challenge procedures and the lack of diversity in arbitral tribunals. Another major concern is the practice of ‘double-hatting’ where a single person may act as party counsel in one case and then be appointed by them as an arbitrator in other proceedings.^[32]

Once again, the EU promotes the MIC as a panacea that can resolve all concerns related to independence and impartiality of the arbitrators and the transparency of the proceedings. The State would appoint the MIC, and once appointed, they would serve nine-year terms. The judges would have a fixed remuneration and would be assigned to cases at random case, which should reduce the concerns of bias towards the parties.^[33] The judges would not be allowed to hold any other position during their tenure at the MIC, and they could not act as counsel or arbitrators in investment disputes for a certain period of time after their term.^[34] The hearings and the awards would be available to the public, and the participation of interested third parties would be enabled, especially in relation to sensitive cases with public health and environmental implications.^[35]

§3.02[B]

The WG III proposed a pragmatic solution for the achievement of the independence and impartiality of the arbitrators and the transparency of ISDS proceedings, which can be implemented in the existing framework. On 1 May 2020, the UNCITRAL Secretariat and ICSID published the Draft Code of Conduct for Adjudicators (Draft Code). The Draft Code resulted from a joint effort by UNCITRAL and ICSID to develop a set of universal standards which would address the existing concerns about the independence, impartiality and accountability of the decision-makers in ISDS.^[36]

The definition of ‘adjudicators’ in the Draft Code covers a wide range of decision-makers in ISDS, including arbitrators, ad hoc committee members, candidate adjudicators, appeal judges, and judges in permanent bodies.^[37] The Draft Code provides the general rules of independence and impartiality of adjudicators, along with a broad and ongoing disclosure obligation.^[38] The extensive disclosure obligations also address the key issues specific to ISDS: repeat appointments, issue conflicts and double-hatting.

Repeat appointments of adjudicators by the same party in ISDS (as counsel, arbitrators, experts, advisors) have been widely criticized for their potential negative effect on the integrity of the process.⁴¹The Draft Code does not prohibit repeat appointments, but it creates a broad disclosure obligation that can be modified by lawmakers in the manner they deem appropriate.^[39] The adjudicators will have to disclose all past and present appointments that may give rise to doubts about their independence and impartiality.⁴³The broad disclosure obligation in the Draft Code also includes the duty to disclose any publications or speeches which reflect any established position of the adjudicator on legal matters relevant to the dispute, which could raise doubts of existing issue conflicts.^[40]

‘Double-hatting’ has been criticized in the ongoing ISDS reform process as one of the main flaws of the existing system. It is the practice of ISDS adjudicators simultaneously acting as counsel, experts, adjudicators, or taking other roles in multiple ongoing ISDS proceedings. The Draft Code provides policymakers the ability to choose the appropriate approach to this issue, ranging from a complete ban to a robust disclosure obligation (which can be time-phased or related to specific parties, facts or treaties).^[41]

The enforcement of the rules provided in the Draft Code would be primarily based on voluntary compliance, but they can also be considered in the challenge proceedings. Other sanctions can be defined by policymakers, including monetary, disciplinary and reputational measures. The Draft Code is open for comments, and it will be discussed by the WG III in its regular sessions, but it is already a significant step

§3.02[C]

forward in the creation of universal standards for the conduct for ISDS adjudicators, which could enhance their perceived neutrality and independence.

The issue of transparency in ISDS can be addressed by the application of the UNCITRAL Transparency Rules.^[42] The Transparency Rules comprise a set of procedural rules dealing with, among other things, the disclosure of case-related documents, public access to hearings, and submissions by amici curiae and non-disputing state parties. The Transparency Convention could extend the application of the Transparency Rules to the entire treaty-based international investment regime as it stood on 1 April 2014, including all the old-generation treaties, regardless of the applicable arbitration rules.^[43] Its wide adoption would generate the systematic reform without complex multilateral or bilateral renegotiations of treaties.

Therefore, the desired reform effects, including those pursued by the EU in its MIC proposal, could be accomplished through one legal instrument applied to the existing ISDS framework, based on international consensus.^[44] The provisions of the Transparency Rules envision the same level of transparency as desired by the EU in their proposal for the MIC. The Transparency Convention also allows for reservations in relation to a specific treaty or investment, which will allow for flexibility in relation to certain treaty partners.^[45]

[C] Reform Options for Cost and Duration of ISDS Proceedings

ISDS proceedings have become lengthier and more burdensome for the states, which is another point of criticism raised at the WG III. ISDS has been criticized for the increasing length of the proceedings.^[46] There is dissatisfaction with the lack of predictable rules on cost allocation and the issue of security for costs, and the fact that arbitral tribunals often make cost orders which are in favour of the investors.^[47] The complaints are also aimed at the dilatory tactics which are sometimes employed by the investors, which impede the efficiency of the proceedings and contribute to the accumulation of costs.^[48]

§3.03

In any deliberation about the balance of the costs and duration of ISDS proceedings, there must be a distinction between ‘excessive’ or ‘unjustified’ time and costs, on the one hand, and ‘necessary’ or ‘justified’ time and costs on the other.^[49] In cases with multiple parties arising out of complex legal relations and dealing with industryspecific standards and regulations, efficiency has to be sacrificed for precision and accuracy. Therefore, the quality of outcomes should be balanced with the desire to reduce cost and duration.⁵⁴Furthermore, there is a lack of consistency in the basis for the calculation of the duration of ISDS proceedings because it also includes the period after the award, enforcement and challenge proceedings.⁵⁵

The main concerns related to the cost and duration of ISDS proceedings could be addressed by reforms and amendments of the existing framework, through some reform options by the WG III. These reform options include a more serious approach to alternative dispute resolution (ADR), strict procedural timetables and securities for costs, as well as the use of videoconferencing and other technical tools for time and cost-efficiency.^[50] These specific considerations either can be addressed in the form of universally applicable rules of procedure or they can be developed for each treaty on a case-by-case basis.

§3.03 ISDS AT THE REGIONAL LEVEL: EU PERSPECTIVE

POST-ACHMEA

Although the concerns regarding ISDS at the international level were not raised only by the EU, the viability of the existing ISDS system has been under unrelenting scrutiny ever since the highly anticipated judgment in Slovak Republic v. Achmea B.V. This was a case brought before the CJEU based on the dispute between the Dutch insurer Achmea B.V. (formerly known as Eureko B.V.) and Slovakia. The Achmea decision was the death sentence for ISDS among EU Member States, but it was also the dawn of the idea of the MIC and its global promotion as an alternative for ISDS.

Achmea brought a claim against Slovakia in 2008 after the State reversed its policy of liberalization of the health market in 2006. This move by the Slovak Government prohibited the distribution of the profits obtained by Achmea through its insurance activities in Slovakia. Therefore, Achmea initiated arbitral proceedings against Slovakia on the grounds of substantive treaty violations of the SlovakiaNetherlands BIT. The dispute was decided by an arbitral tribunal seated in Frankfurt under the UNCITRAL Rules. The arbitral tribunal ruled in favour of Achmea in 2012, finding that Slovakia violated its obligations under the BIT and ordered a payment of damages in the amount of approximately EUR 22.1 million.

This award was followed by setting-aside proceedings brought by Slovakia before

German higher courts.^[51] Ultimately, the German Federal Court of Justice referred

§3.03

questions on the compatibility with EU law to the CJEU for a preliminary ruling, stating its position that the clause was not contrary to EU law. The CJEU held that the dispute resolution clause in the Netherlands-Slovakia BIT was contrary to the provisions of the Treaty of the Functioning of the EU (TFEU), which provide the CJEU as the exclusive jurisdiction to give preliminary rulings concerning the interpretation of EU treaties^[52]and to decide disputes related to the interpretation of the EU treaties.^[53] Thus, the CJEU ruled in favour of Slovakia, effectively declaring ISDS provisions of intra-EU BITs ‘incompatible with EU law’.^[54]

The EU Member States swiftly moved to enforce the CJEU ruling, negotiating in bilateral and multilateral settings to create an appropriate mechanism for the termination of the existing intra-EU BITs. Interestingly, the UK was also among the states which declared their willingness to join the movement, despite the fact that they are on the verge of leaving the EU, after which they will no longer be bound by EU law.^[55]

On 15 January 2019, twenty-one Member States (including the UK) issued a declaration committing to the termination of their intra-EU BITs by 6 December 2019.^[56]On 16 January 2019, Finland, Luxembourg, Malta, Slovenia and Sweden adopted a largely similar declaration, with the addition of provisions connected to the ECT.^[57]Following these declarations, the EU Member States reached an agreement on a plurilateral treaty for the termination of intra-EU BITs on 24 October 2019.^[58] This agreement solidified the decision of the EU and its Member States to terminate all intra-EU BITs in a plurilateral manner, rather than bilaterally. This clearly enforced the determination of the EU to eliminate ISDS and to create the conditions for the establishment of a MIC, which it has been promoting intensively in international circles, including in the WG III meetings.^[59]

Thus, the EU and the rest of the world are on parallel tracks in the process of overcoming existing ISDS concerns. At the global level, WG III is pursuing a more gradual approach, starting with the drafting of ISDS clauses in investment treaties and a case-by-case approach to the internationally accepted reform options for ISDS. In

§3.04[A]

contrast, the EU is pursuing a systematic overhaul of the investment dispute resolution system through a rigid, institutional system which prefers adherence to its formalities over the proposed practical solutions.^[60]

§3.04 ISDS REFORM AT THE NATIONAL LEVEL: THE CASE OF BiH

As an aspiring EU Member State, BiH is caught between the progressive flow of global ISDS reform discussions and the unequivocal intent of the EU to eliminate intra-EU BITs and the ISDS system, replacing them with a standing MIC. Considering that BiH has almost an equal number of intra-EU and non-EU BITs,^[61] it will soon find itself in a two-track reform process. On the one hand, it will have to find the most favourable method of termination of its intra-EU BITs. Once the BITs are terminated, the investment protection provisions under EU law will govern its relations with foreign investors, including dispute resolution before the MIC or otherwise. On the other hand, BiH can benefit from the global ISDS movement to reform the ISDS clauses in the non-EU BITs in order to enable a more effective management of investor claims, primarily through dispute prevention and ADR.

BiH has been exposed to several high-value claims by investors recently, which have ended up in significant financial losses, and currently faces three pending cases.^[62]The value of just one of these claims is around EUR 1.5 billion.^[63] The institutional ISDS structure in BiH is complex and the existing ISDS provisions originate from oldgeneration BITs, which cannot adequately protect the State nor the investors. Therefore, BiH would certainly benefit from effective ISDS reform.

[A] The Existing ISDS Framework in BiH

The current ISDS system in BiH consists of a network of BITs whose ISDS clauses provide for various dispute resolution mechanisms. BiH is a party to thirty-seven BITs, twenty of which are with EU Member States. In addition, BiH has BITs with four countries that are aspiring for EU membership, all of which are old-generation BITs.^[64]

The ISDS mechanisms in BiH BITs mostly consist of three elements: an attempt to resolve the dispute amicably, followed by a ‘fork in the road’ provision, allowing the investor to choose to submit its claim before the national courts or administrative

§3.04[B]

tribunals of the host state, or to submit to institutional or ad hoc arbitration.^[65] The nature of the fork-in-the-road provisions is such that once a party chooses a dispute resolution mechanism, they automatically waive the possibility of referring to another court or institution.^[66] The purpose of such provisions is to prevent the duplicity of proceedings over the same claim.^[67] The fact that an investor submits a claim before a national court does not fully preclude arbitration, as long as the investor terminates the court proceedings and initiates arbitration before the conclusion of the judicial proceedings. None of the BiH BITs contain a mandatory exhaustion of domestic remedies as a precondition for arbitration.^[68]

All BiH BITs provide for ICSID arbitration as an option, while some also refer to conciliation or proceedings under the Additional Facility Rules of ICSID.^[69] The other most common arbitral institution provided in BiH BITs is the ICC in Paris.^[70] Some of the BITs also refer to arbitral institutions of the home state, in addition to the international arbitral institutions and ad hoc arbitration.^[71] The most common form of ad hoc arbitration provided in BiH BITs is arbitration under the UNCITRAL Rules, which are modified directly in the BIT in certain cases, including the modification of the default appointing authority.^[72]

[B] The Future of ISDS in BiH as an EU Member State

Based on the recent developments in the EU, BiH as a new Member State will have to terminate all of its BITs with other EU Member States. There is no longer a question of ‘if’, but only ‘when’ and ‘how’. The answers to the latter questions may have gotten their contours with the Agreement for the Termination of Bilateral Investment Treaties Between the Member States of the European Union (Agreement), which was signed by twenty-three EU Member States on 5 May 2020. The Agreement implemented the

§3.04[B]

Achmea decision of the CJEU and sealed the fate of intra-EU BITs and ISDS within the EU.^[73] Upon its entry into force, the Agreement will terminate all the existing BITs among EU Member States, which includes their sunset clauses – the clauses that would grant the investors the right to bring claims against the host state for a specified period of time after the termination of the BIT.^[74] The BITs will be considered null and void as of the date of the Achmea^[75] decision, 6 March 2018. The Agreement does not foresee any effect on arbitral proceedings that were previously concluded under the BITs,^[76] but it certainly creates a disruption for the cases which remain unresolved.

A review of the Agreement shows that the EU is proposing internal solutions with the same effect as those it so vocally opposing at the global stage, while at the same time offering some solutions which it otherwise finds concerning in the existing ISDS system. The Agreement provides that pending arbitration proceedings which were commenced prior to the Achmea decision will be discontinued and replaced by ‘structured dialogue’ that must be initiated within six months from the termination of the BIT.^[77] Prior to the initiation of ‘structured dialogue’, the investor must terminate pending arbitral proceedings and court proceedings for the recognition and enforcement of arbitral awards.^[78]

The settlement proceedings through structured dialogue can only be initiated if the CJEU or a national court finds that the contested state measure is a violation of EU law.^[79] Otherwise, the Agreement leaves investors without any recourse for their investment claims that were previously based on provisions of the BIT. Structured dialogue is described as a proceeding before an impartial facilitator ‘with a view of finding between the parties an amicable, lawful and fair out-of-court and out-ofarbitration settlement’.⁸⁶This individual should be appointed by mutual agreement of the investor and the Member State involved, or alternatively by an appointing authority, which is yet to be determined.^[80] This provision opens many questions and creates uncertainties for both the investor and host state, which could have been avoided in the normal course of the arbitral proceedings.

The facilitator’s role seems largely similar to the role of a sole arbitrator, not only in the nature of their position but also in the manner of appointment. Therefore,

§3.04[B]

‘structured dialogue’ will be nothing but displaced ad hoc arbitration before a sole arbitrator, conducted under the conditions put forth by the EU. The difference is the smaller likelihood of the parties agreeing to the sole facilitator than to a panel of arbitrators, which can lead to additional delays and uncertainty. This is already an echo of the complaints the EU had voiced against the existing ISDS system.

Furthermore, there is no requirement of subject-matter expertise or knowledge in investment arbitration on the side of the facilitators, but they are required to have expertise in EU law.^[81] In addition, the Agreement provides that the facilitator should base their decision on the jurisprudence of the CJEU and the national courts, as well as the decisions of the EU Commission.⁸⁹This undermines one of the main interests of parties who engage in ISDS before arbitral tribunals: the possibility of appointing arbitrators with the required expertise that is crucial for the case at hand. Once again, the complaint of the EU about the ad hoc selection of the arbitrators by the parties can easily be applied to the ‘structured dialogue’ proposal.

The facilitation proceedings are also meant to be confidential,^[82] just like arbitral proceedings. There is no visible advantage in the replacement of arbitral proceedings with ‘structured dialogue’ in this respect. The investors would still be able to seek recourse with the courts of the EU Member States within six months from the termination of the BITs, regardless of the statute of limitations.^[83] Therefore, if the Agreement was supposed to be a first glance at the world without ISDS in the EU, the transition period still strongly resembles ISDS as we know it.

In the context of BiH, this primarily means that it would have to ratify the Agreement upon accession into the EU, thereby automatically terminating its existing intra-EU BITs, including the sunset clauses. The most significant consequences will be felt by the investors who have pending arbitration cases against BiH under intra-EU BITs, most notably in EGS v. Bosnia and Herzegovina,^[84] which is also the highest valued claim ever brought against the country in ISDS (appx. EUR 1.5 billion). This case was brought under the ECT and the Slovenia-BiH BIT.^[85]

At the outset of this case, the competent BiH court declined jurisdiction and amicable settlement attempts were unsuccessful. Therefore, if EGS is forced to engage in ‘structured dialogue’ as another attempt of peaceful settlement or instead to refer the case to a domestic court, BiH may effectively get a ‘second bite of the apple’. The dispute which was elevated to the neutral forum of the ISDS arbitral tribunal would once again be brought to the ‘home court’ of the respondent host state. If the CJEU or a national court finds that the contested measure of the State was not contrary to EU law, the investor may be denied even the chance to reach a settlement agreement in the new framework of structured dialogue. Thus, it seems that the EU is using the

§3.04[C]

transition period between the ISDS system and its proposed MIC to refer some of the arbitral cases back to the domestic forum or at least to alternative dispute settlement under EU law.

This brief overview of the text of the draft Agreement shows that the EU has made a sweeping decision to terminate intra-EU BITs quickly, and now it must retrofit the mode of implementation to match their desired outcome. Without discussing the pro futuro effects of the termination of intra-EU BITs and their ISDS clauses, it seems counterproductive and disruptive to force parties in pending arbitration cases to transplant their dispute into a provisional forum which brings no visible improvement to the existing ISDS system. However, BiH as a Member State will not have any choice but to follow suite and ratify the Agreement with all its implications. It may even have a second chance to settle its ongoing ISDS cases with investors from EU Member States if the proceedings are not concluded before its accession to the EU.

[C] ISDS Reform Options for the Surviving BiH BITs

BiH is a country with an abundance of natural resources that are ripe for exploitation and which can be harnessed for long-term economic development.^[86] Due to the limited capacities within the country itself, such goals can effectively be accomplished only with the engagement of serious foreign investors.^[87] Therefore, in its pursuit of ISDS reform, BiH should take the interests of such existing and future investors into account.

Investors closely follow and have expressed their support for the proposals set forth by some governments in their submissions to WG III.^[88] From their perspective, the main advantages of ISDS are in the balance of the positions of the disputing parties, the balance between the consistency, correctness and finality of the arbitral award, and the enforceability regime of arbitral awards.^[89] The submission of the Corporate Counsel International Arbitration Group makes clear that the investor community is in favour of gradual ISDS reform and that they will not support reform options which endanger their interests.^[90] Therefore, BiH should consider the reform options embraced by the community of investors and their legal representatives which were outlined in their submissions to the WG III.

Once BiH becomes an EU Member State, the surviving BITs with non-EU states should be reformed and modernized in accordance with international standards. This can be accomplished by treaty amendments in the spirit of the global ISDS reforms. Although the ISDS reform discussions cover a broad range of topics, one of the most important reform areas for BiH is the prevention and peaceful settlement of disputes. The significance of robust dispute prevention and ADR mechanisms for BiH cannot be overstated due to the fact that amicable settlement was not pursued effectively in the

§3.04[D]

ISDS cases BiH recently lost.^[91] This stage of dispute resolution is very rarely pursued in a structured and genuine manner, but it usually amounts to a formal meeting or exchange of correspondence documenting the failure to find common ground.¹⁰⁰An effective reform in this area, followed by treaty amendments, should enhance the position of BiH as a respondent state and prevent investor claims from escalating into lengthy disputes.

[D] ISDS Reform in BiH: Spotlight on Dispute Prevention and ADR

The amicable settlement provisions in BiH BITs appear in several variations, but in essence they are all broad, vague and do not contain any guidance for their actual application.^[92] The only parameter that appears in these provisions is the duration of amicable settlement attempts, although in some cases, even the duration of amicable settlement proceedings is left open.^[93] Amicable settlement in BiH BITs refers to either consultations and/or negotiations or, in the cases of Egypt and Kuwait, recourse to diplomatic channels.^[94] The terms negotiation, conciliation and consultations are mostly used interchangeably, and it does not seem like they were meant to be interpreted narrowly.

More than 21% of BiH BITs only provide for an attempt of amicable settlement, without any further specifications (none of the non-EU BITs fall into this category). The remaining amicable settlement provisions are distributed as follows:

consultations (5.4% of total BiH BITs/14.3% of non-EU BITs);
negotiations (10.8% of total BiH BITs/7.1% of non-EU BIT);
consultations and negotiations (45.9% of total BiH BITs/64.3% of non-EU

BITs).^[95]

The amicable settlement provisions in BiH BITs are placed within a frame of six months (in 51.7% of the total BiH BITs and 42.8% of the non-EU BITs) or three months (29.7% of total BiH BITs and 42.8% of non-EU BITs).^[96] During this time, the parties should attempt conciliation, settlement or negotiations, and in some cases even diplomatic channels. In several cases recourse to diplomatic channels is explicitly

§3.04[E]

excluded.^[97] The potential reform solutions can be tailor-made for each BIT, guided by the reform options developed through the work of WG III.

[E] Structured and Effective Amicable Settlement Provisions (Consultations, Negotiations, Mediation)

Among the variety of reform options for dispute prevention, the use of ADR mechanisms, such as mediation, has been strongly endorsed by the Secretariat of UNCITRAL.^[98] There has been a series of significant developments in the field of mediation, especially in the context of international arbitration. The most notable instrument is the United Nations Convention on International Settlement Agreements Resulting from Mediation (Singapore Convention on Mediation).^[99] The Singapore Convention will play a valuable role in allowing the parties to enforce post-mediation settlement agreements internationally in a similar manner as arbitral awards. ICSID is also currently preparing mediation rules as part of the proposed amendments to the ICSID Rules aimed at streamlining the dispute resolution process and reducing the time and cost of proceedings.^[100] The proposed mediation rules would apply in ISDS cases, regardless of the existence of a previous agreement to mediate.^[101]

Therefore, mediation can become a powerful tool for amicable settlement of investor-state claims based on internationally accepted standards. BiH could propose a model mediation clause that could be adjusted for each BIT or adopted in a unified manner. The ratification of the UNCITRAL Mediation Convention would add clarity, structure and legitimacy to amicable settlement through mediation between investors and states. Mediation is also endorsed in twelve submissions to WG III, including the submission by the EU and its Member States.^[102] None of the dispute resolution clauses in BiH BITs provide for mediation because the amicable settlement provisions in BiH BITs stem from old-generation treaties that predated the modern developments in ADR.^[103] Mediation could become the default amicable settlement mechanism in BiH BITs with the benefit of international enforcement through the Singapore Convention.

Another potential solution is consultations and exchange of information between the State and the investor. Such a provision already exists in the BiH-Serbia BIT, but it

§3.04[F]

applies only to the contracting parties (i.e., the states themselves).^[104] Provisions of this kind serve to help the contracting parties arrive at a common understanding on potentially unclear treaty provisions to avoid disputes. This is an important tool available at the government level for the avoidance of State-to-State disputes, but it could also be used in the context of investor-state disputes. Many ISDS claims are based on claims of indirect expropriation, violations of fair and equitable treatment (FET) clauses and most-favoured-nation (MFN) treatment due to the harmful effect of legislative changes.

Thus, the ability of the investor to approach the host state with a request for information or clarification of the relevant norms could significantly de-escalate the tensions between the parties and potentially serve as a dispute avoidance tool. This also applies in cases where investors have an erroneous or diverging interpretation of their rights and duties under the applicable BIT.

[F] Institutional Framework for Amicable Settlement Proceedings: Best Practices from Brazil and BiH

The key factor in the success and effectiveness of any amicable settlement mechanism is a strong, dedicated institutional framework. There are many examples of different standing or ad hoc bodies established by governments around the world mandated to carry out work on dispute prevention and amicable settlement on behalf of the government. These bodies and agencies aim to ensure a timely response to potential investor claims and the prevention of the escalation of the disputes where possible.^[105]Two examples are the institutional frameworks established in Brazil and BiH.

[1] Cooperation and Facilitation Investment Agreement in Brazil

One example of a potentially beneficial and effective mechanism for dispute prevention and amicable settlement was established in Brazil, whose government adopted the Brazilian Cooperation and Facilitation Investment Agreement (CFIA) in an attempt to overcome the growing concerns regarding the existing ISDS framework.^[106] The CFIA provides for a twofold dispute prevention mechanism:

§3.04[F]

An ombudsperson is appointed to facilitate the communication between thehost state and the foreign investor on any existing concerns, with the aim to prevent disputes from arising.
A joint committee, which is composed of government representatives of bothtreaty parties, acts as a collaborative body for all matters regarding bilateral investments between the parties, and especially in preventing disputes and ensuring amicable settlement.^[107]

In case an investor raises a complaint, the ombudsperson proactively assesses the complaints received from the other party or investors of the other party and recommends adequate actions to resolve it.^[108] The joint committee operates the second phase, reactively, whenever it receives a written request enquiring about the incompatibility of a specific measure and the Agreement. The joint committee deliberates and issues a report on the issue at hand, regarding the specific measure for which the investor is complaining.^[109] In its report, the joint committee will try to find an amicable solution to the measure in question, which can encompass, for example, a recommendation to the relevant government agency to bring the measure in conformity with the CFIA. Only after the complaining party has exhausted the dispute prevention procedure without a satisfactory resolution, can the parties initiate arbitral proceedings between states or ad hoc arbitration between the investor and the State.^[110]

[2] Permanent Negotiating Body for the Peaceful Settlement of International Investment Disputes in BiH

In an effort to improve the management of investor claims, the Council of Ministers of BiH has recently established a ‘task force’ for international investment disputes. Namely, the Permanent Negotiating Body in BiH for the Peaceful Settlement of International Investment Disputes (the Permanent Body) was established by the Decision of the Council of Ministers on 24 November 2017, with the mandate to ‘ensure a timely, coordinated and efficient performance of the competent institutions in the representation and protection of the interests of Bosnia and Herzegovina in the process of the peaceful settlement of international investment disputes, in cases which are initiated against Bosnia and Herzegovina’.^[111]

The Permanent Body consists of representatives of the:

– Ministry of Foreign Trade and Economic Relations;

§3.05

Ministry of Justice;
Ministry of Finance;
Ministry of Foreign Affairs;
State Attorney’s Office;
Ad hoc members from the legal entity, which is involved in the dispute, thecompetent ministries and institutions of the entities and the State Attorney’s

Office.^[112]

The Permanent Body coordinates and assists the State Attorney’s Office in the attempted peaceful settlement, and the State Attorney’s Office (with the approval of the Council of Ministers) takes over all the activities if the negotiations fail and the investor initiates arbitration.^[113] The Permanent Body has the potential to be a valuable asset for BiH in the process of developing and implementing effective amicable settlement mechanisms for ISDS in BiH BITs. As a party at the negotiating table, the Permanent Body can bring not only the legitimacy of the government but also the cooperative spirit and fairness which comes from its mandate.

Thus, the tools for effective ISDS reform in BiH already are in place in the existing BIT framework. However, these tools need to be modernized and fine-tuned to meet the challenges of the contemporary standards in investment protection. A significant first step would be to harness the potential of the amicable settlement mechanisms, which could help prevent the escalation of disputes and retain valuable investments in the country.

§3.05 CONCLUSION

This chapter has reviewed the colourful spectrum of ISDS reform options that are taking shape at the global, regional and national level. WG III has become the global forum for high-level discussions on the various potential directions of ISDS reform, ranging from its complete abandonment to gradual and targeted reform. The EU and its Member States are on the verge of the complete abandonment of ISDS in its current form and the establishment of a standing MIC in its stead. Other regions of the world and investors have submitted proposals for specific, gradual reforms to be implemented through international instruments and treaty amendments.

The concerns identified through the discussions at WG III are universally accepted and are grouped into three main areas of intervention: consistency and predictability of the ISDS proceedings, arbitrators and decision-makers, and the cost and efficiency of ISDS proceedings. Although the concerns are universal, the proposed solutions differ significantly between the EU and the rest of the world. While most of the participating countries propose specific reforms that can be implemented in the

§3.05

existing ISDS framework, the EU and its Member States are insisting on the MIC as the only systematic solution that would resolve all the identified concerns in one package. The discussions are still ongoing, and whether the support for the MIC will spread to the international level remains to be seen. Within the EU itself, the EU Commission has laid down the groundwork for the termination of all intra-EU BITs. There clearly will no longer be a place for ISDS in the EU.

BiH, the small, complex transitioning country in the heart of Europe, which is still progressing towards EU membership, is caught in the whirlwind of diverging reform options. On the one hand, it will have to terminate intra-EU BITs and refer investor disputes to dispute resolution mechanisms compliant with EU law. On the other hand, the non-EU BITs should be reformed to enhance the dispute prevention and ADR mechanisms to avoid the escalation of disputes with investors. Although BiH has its hands tied in relation to intra-EU BITs, this chapter’s analysis has shown that the ISDS mechanisms in the surviving BITs could be successfully reformed and that no need exists to abandon ISDS as we know it to address the present concerns.

The most promising starting point for ISDS reform for BiH is in the field of dispute prevention and amicable settlement, which could bring long-term benefits to the country and its investors. An effective modernization of the existing BITs with non-EU states may be sufficient to overcome the existing concerns and improve the ISDS system in the future.

Whether the new EU investment protection landscape and a reformed ISDS system can coexist in a single EU Member State is difficult to determine. Therefore, BiH could serve as a case study for the viability of such a framework. The next chapter of this story will depend on the success of ISDS reform in the upcoming years. Although the calls for revolution coming from the EU are compelling, the BiH ISDS system may achieve its desired results through a steady evolution.

[1] . As at 31 December 2019, UNCTAD Investment Policy Hub (https://investmentpolicy.unctad. org/).

[2] . The full speech is available in the ICCA Congress Series No. 18, Legitimacy: Myths, Realities, Challenges, Wolters Kluwer (2015).

[3] . As at 31 December 2019.

[4] . A google search on ‘if you don’t know where you have been how do you know where you are going’ gives multiple results and variations. This particular wording is attributed to the author Terry Pratchett. The full quote is ‘If you do not know where you come from, then you don’t know where you are, and if you don’t know where you are, then you don’t know where you’re going.

And if you don’t know where you’re going, you’re probably going wrong.’

[5] . Rachel Wellhausen, Recent Trends in Investor–State Dispute Settlement, 7 J. Int’l Dispute Settlement 12 (2016); George Kahale, Rethinking ISDS, 44 Brooklyn J. Int’l L. 14 (2018).

[6] . Tom Ginsburg, International Substitutes for Domestic Institutions: Bilateral Investment Treaties and Governance, 25 International Review of Law and Economics 4 (2005).

[7] . Although investors did indeed start using ISDS more frequently to pursue treaty-based claims with notable success, the notion promoted by some ISDS critics that investors overwhelmingly prevail in ISDS cases is factually incorrect. According to data provided by UNCTAD, out of the 647 cases concluded as of 31 July 2019, states prevailed in 230 and investors prevailed in 190 cases. UNCTAD Investment Settlement Navigator, https://investmentpolicy.unctad.org/investmentdispute-settlement.

[8] . UNCITRAL Secretariat, Note, ‘Possible Reform of Investor-State Dispute Settlement’, 6–10, https://undocs.org/en/A/CN.9/WG.III/WP.142.

[9] . United Nations Commission on International Trade Law Working Group III (ISDS Reform) homepage, https://uncitral.un.org/en/working_groups/3/investor-state.

[10] . United Nations, UNCTAD World Investment Report, Key messages and overview, 7, 2019 https:// unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=2460.

[11] . Elektrogospodarstvo Slovenije – razvoj ininzeniring d.o.o. v. Bosnia and Herzegovina (ICSID Case No. ARB/14/13).

[12] . Slovak Republic v. Achmea B.V., ECJ 20, Case C-284/16) EU C 2018 158 (April 2018).

[13] . UNCTAD Investment Settlement Navigator, https://investmentpolicy.unctad.org/investmentdispute-settlement.

[14] . Alan Redfern, Law and Practice of International Commercial Arbitration (Oxford Law, 4th ed.

[15] ), 486.

[16] . UNCTAD, Reforming Investment Dispute Settlement: A Stocktaking, International Investment Agreements Issues Note, 2, https://unctad.org/en/PublicationsLibrary/diaepcbinf2019d3_en.

pdf.

[17] . Ibid.

[18] . United Nations Commission on International Trade Law Working Group III (ISDS Reform) homepage, https://uncitral.un.org/en/working_groups/3/investor-state.

[19] . An overview of the official WG III sessions, inter-sessional meetings and government submissions can be found on the official website of WG III, https://uncitral.un.org/en/working_groups /3/investor-state.

[20] . Chartered Institute of Arbitrators, Discussion Paper, ‘Efficiency, Decisions and DecisionMakers’, https://www.ciarb.org/media/6286/february-ciarb-isds_discussion-papers.pdf.

[21] . The list of country submissions provided to date can be found on the official website of WG III, https://uncitral.un.org/en/working_groups/3/investor-state.

[22] . UNCTAD, IIA Issues Note No.2, Reform of investor-state dispute settlement, https://unctad.org /en/Pages/Publications/Intl-Investment-Agreements–Issues-Note.aspx.

[23] . Gus Van Harten, Investment Arbitrators’ Evident Lack of Restraint, 5 J. Int’l Dispute Settlement 1–4 (March 2014).

[24] . Chartered Institute of Arbitrators, Discussion Paper, ‘Efficiency, Decisions and DecisionMakers’, 15, https://www.ciarb.org/media/6286/february-ciarb-isds_discussion-papers.pdf.

[25] . UNCITRAL Secretariat, Note, A/CN.9/930/Add.1/Rev.1, para. 34; A/CN.9/935, para. 43.

[26] . Article 31(3)(a) of the Vienna Convention on the Law of Treaties (VCLT) expressly requires that interpreters of a treaty ‘take[] into account … any subsequent agreement … [between the treaty parties] regarding the interpretation of the treaty or the application of its provisions’.

[27] . David Gaukrodger, The legal framework applicable to joint interpretive agreements of investment treaties, OECD Working Papers on International Investment (2016/01), https://www. oecdilibrary.org/docserver/5jm3xgt6f29wen.pdf?expires=1588353194&id=id&accname=gue st&checksum=04061FBEA4E44D3637B725E7E35EDF17.

[28] . Submission from the Government of Brazil, State-to-State mechanisms, paras 33–36; A/CN.9/WG.III/WP.176, Submission from the Government of South Africa (raising the question whether ISDS mechanisms are desirable or necessary in the first place). See General Assembly resolution 70/1 of 25 September 2015, Transforming our world: the 2030 Agenda for Sustainable Development; A/CN.9/WG.III/WP.176, Submission from the Government of South Africa; A/CN.9/WG.III/WP.161, Submission from the Government of Morocco; A/CN.9/WG.III/ WP.162, Submission from the Government of Thailand; A/CN.9/WG.III/WP.164 and A/CN.9/WG.III/WP.178, Submissions from the Government of Costa Rica; A/CN.9/WG.III/

[29] . Note by the UNCITRAL Secretariat, Possible reform of investor-State dispute settlement (ISDS): Consistency and related matters, 15 (28 August 2018), https://undocs.org/en/A/CN.9/WG.III /WP.150.

[30] . Ibid.

[31] . Gabrielle Kaufmann-Kohler, Arbitral Precedent: Dream, Necessity or Excuse? (The 2006 Freshfields Lecture), Arbitration International, Volume 23, Issue 3, LCIA (2007) https://www. arbitration-icca.org/media/4/77507134886347/media01231914308713000950001.pdf.

[32] . UNCITRAL Secretariat, Note, Possible reform of investor-State dispute settlement (ISDS), Background information on a code of conduct 3, https://undocs.org/A/CN.9/WG.III/WP.167.

[33] . UNCITRAL Working Group III (ISDS Reform), Note by the Secretariat, Possible reform of investor-State dispute settlement (ISDS) 7, https://undocs.org/en/A/CN.9/WG.III/WP.166.

[34] . Ibid.

[35] . Ibid.

[36] . UNCITRAL Secretariat, Note, Possible reform of investor-State dispute settlement (ISDS), Background information on a code of conduct 3, https://undocs.org/A/CN.9/WG.III/WP.167.

[37] . Draft Code of Conduct for Adjudicators in Investor-State Dispute Settlement, Art. 2.

[38] . Ibid., Art. 4. 41. Ibid., Art. 5.

[39] . Ibid. 43. Ibid.

[40] . Ibid.

[41] . Ibid., Art. 6.

[42] . UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration, https://www.

uncitral.org/pdf/english/texts/arbitration/rules-on-transparency/Rules-on-Transparency-E.pdf.

[43] . United Nations Convention on Transparency in Treaty-based Investor-State Arbitration, https://www.uncitral.org/pdf/english/texts/arbitration/transparency-convention/Transparen cy-Convention-e.pdf.

[44] . Ibid.

[45] . Ibid.

[46] . UNCITRAL Secretariat, Note, Possible reform of investor-State dispute settlement (ISDS) – cost and duration (31 August 2018) 3, https://undocs.org/en/A/CN.9/WG.III/WP.153.

[47] . Article 47 of the ICSID Convention provides a basis for respondent states to request security for costs as a provisional matter in cases where the claimant is likely unwilling or unable to pay the costs of the responding state. This was exercised in practice, including the decision 13 August 2014, where an ICSID tribunal ordered security for costs and sanctioned the claimant’s failure to comply with the order on security for costs. RSM Production Corporation v. Saint Lucia, ICSID Case No. ARB/12/10.

[48] . UNCITRAL Secretariat, Note, Possible reform of investor-State dispute settlement (ISDS) – cost and duration (31 August 2018) 4–5, https://undocs.org/en/A/CN.9/WG.III/WP.153.

[49] . Ibid. 54. Ibid. 55. Ibid.

[50] . Ibid.

[51] . Bundesgerichtshof (German Federal Court of Justice) Decision of 3 March 2016, Case I ZB 2/15.

[52] . Treaty of the Functioning of the EU (TFEU), Art. 267.

[53] . Ibid., Art. 344.

[54] . Jens Hillebrand Pohl, Intra-EU Investment Arbitration after the Achmea Case: Legal Autonomy Bounded by Mutual Trust? 14 European Constitutional L. Rev. 77 (2018).

[55] . Harkiran Hothi, Chiraag Shah and Philipp Kurek, EU Member States Agree to Terminate Their Intra-EU BITs: Is This the End of Intra-EU BIT Arbitrations and What about Brexit? Practical Law Arbitration Blog (8 February 2019) http://arbitrationblog.practicallaw.com/eu-member-statesagree-to-terminate-their-intra-eu-bits-is-this-the-end-of-intra-eu-bit-arbitrations-and-what-abo ut-brexit/.

[56] . Declaration of the Member States of 15 January 2019 on the legal consequences of the Achmea judgement and on investment protection, https://ec.europa.eu/info/publications/190117bilateral-investment-treaties_en.

[57] . Declaration of the representatives of the governments of the Member States, of 16 January 2019 on the legal consequences of the judgment of the court of justice in Achmea and on investment protection in the European Union, https://www.kormany.hu/download/5/1b/81000/Hungarys %20Declaration%20on%20Achmea.pdf.

[58] . Statement: EU Member States agree on a plurilateral treaty to terminate bilateral investment treaties (24 October 2019) https://ec.europa.eu/info/publications/191024-bilateral-investment -treaties_en.

[59] . Ibid.

[60] . Discussion papers – CIArb at UNCITRAL Working Group III on ISDS Reform: Efficiency, Decisions and Decision-Makers https://www.ciarb.org/media/6286/february-ciarb-isds_discussion-pape rs.pdf.

[61] . UNCTAD Investment Policy Hub, Country Navigator – Bosnia and Herzegovina https://inves tmentpolicy.unctad.org/country-navigator/28/bosnia-and-herzegovina.

[62] . Information provided by the State Attorney’s Office of Bosnia and Herzegovina.

[63] . Elektrogospodarstvo Slovenije – razvoj ininzeniring d.o.o. v. Bosnia and Herzegovina, ICSID Case No. ARB/14/13.

[64] . Analysis of the applicable BiH BITs conducted by the author, based on the treaty texts available in the UNCTAD Country Navigator, https://investmentpolicy.unctad.org/country-navigator/2 8/bosnia-and-herzegovina.

[65] . Ibid.

[66] . Johan Billet, Maria Elenora Benini, Cari-Dee Lee and Cecile Oosterveen, International Investment Arbitration -Practical Handbook 188 (Maklu Publishers 2016).

[67] . Ibid.

[68] . Analysis of the applicable BiH BITs conducted by the author, based on the treaty texts available in the UNCTAD Country Navigator, https://investmentpolicy.unctad.org/country-navigator/2 8/bosnia-and-herzegovina.

[69] . Agreement on encouragement and reciprocal protection of investments between Bosnia and Herzegovina and the Kingdom of the Netherlands (2002).

[70] . Contained in five BITs, two of which are intra-EU BITs: Agreement Between the BelgoLuxembourg Economic Union and Bosnia and Herzegovina on the Reciprocal Promotion and Protection of Investments (2010); Agreement Between the United Kingdom of Great Britain and Northern Ireland and Bosnia and Herzegovina on the Promotion and Protection of Investments (2003); Agreement Between the Ukraine and Bosnia and Herzegovina on the Promotion and Reciprocal Protection of Investments (2004); Agreement Between the Republic of Austria and Bosnia and Herzegovina on the Promotion and Protection of Investments (2002); Agreement Between the Republic of Turkey and the Council of Ministers of Bosnia and Herzegovina Concerning the Reciprocal Promotion and Protection of Investments (2009).

[71] . An example of such a BIT is the Agreement Between the Belgo-Luxembourg Economic Union and Bosnia and Herzegovina on the Reciprocal Promotion and Protection of Investments (2010).

[72] . Agreement Between Bosnia and Herzegovina and the Government of the Italian Republic on the Promotion and Protection of Investments (2005) and Agreement on the Promotion and Protection of Investments Between Sweden and Bosnia and Herzegovina (2002).

[73] . EU Commission Press Release: EU Member States sign an agreement for the termination of intra-EU bilateral investment treaties, 5 May 2020, https://ec.europa.eu/info/files/200505bilateral-investment-treaties-agreement_en. The signatories of the Agreement are Belgium, Bulgaria, Croatia, Republic of Cyprus, the Czech Republic, Denmark, Estonia, France, Germany, Greece, Hungary, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia and Spain.

[74] . Articles 2–4 of the Agreement for the termination of bilateral investment treaties between the Member States of the European Union.

[75] . Slowakische Republik v. Achmea, BV, Case C-2-84/16, http://curia.europa.eu/juris/document/ document.jsf;jsessionid=CD386D75A08C38C220B01D933C8D059D?text=&docid=205702& pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=4089282.

[76] . Agreement for the termination of bilateral investment treaties between the Member States of the European Union, Art. 6.

[77] . Ibid., Art. 8.

[78] . Ibid., Art. 9.

[79] . Ibid. 86. Ibid.

[80] . Ibid.

[81] . Ibid. 89. Ibid.

[82] . Ibid.

[83] . Ibid., Art. 10.

[84] . Elektrogospodarstvo Slovenije – razvoj ininzeniring d.o.o. v. Bosnia and Herzegovina (ICSID Case No. ARB/14/13).

[85] . Agreement Between Bosnia and Herzegovina and the Republic of Slovenia for the Reciprocal Promotion and Protection of Investments (2002).

[86] . The World Bank in Bosnia and Herzegovina, Country Context Overview, https://www. worldbank.org/en/country/bosniaandherzegovina/overview.

[87] . Ibid.

[88] . Submission by the Corporate Counsel International Arbitration Group (CCIAG) to UNCITRAL Working Group III – ISDS Reform (18 December 2019).

[89] . Ibid.

[90] . Ibid.

[91] . The Ministry of Foreign Trade and Economic Relations BiH, Information on the trends and current global reform activities in the field of international investment disputes, 12 (June 2019). 100. Ibid.

[92] . Ibid.

[93] . BITs with Sweden, https://investmentpolicy.unctad.org/international-investment-agreements /treaty-files/483/download; Austria, https://investmentpolicy.unctad.org/international-inve stment-agreements/treaty-files/174/download; and The Netherlands https://investmentpolicy .unctad.org/international-investment-agreements/treaty-files/495/download.

[94] . Agreement Between Bosnia and Herzegovina and the Arab Republic of Egypt Concerning the Promotion and Reciprocal Protection of Investments (2001); Agreement Between Bosnia and Herzegovina and the State of Kuwait for the Encouragement and Reciprocal Protection of Investments (2002).

[95] . Information provided by the State Attorney’s Office in Bosnia and Herzegovina.

[96] . Ibid.

[97] . Unless if the Secretary General of the ICSID declares that the dispute cannot be resolved under the auspices of ICSID, or if one of the parties is withholding the performance of a final award.

[98] . UNCITRAL Secretariat, Note, https://undocs.org/en/A/CN.9/WG.III/WP.166.

[99] . See information on the website of UNCITRAL, https://uncitral.un.org/en/texts/mediation.

[100] . The ICSID Mediation Rules are expected to be offered to a vote to the ICSID Membership in the second half of 2020. ICSID, Updated Backgrounder on Proposals for Amendment of the ICSID Rules (28 February 2020). https://icsid.worldbank.org/en/Documents/WP_4_Backgrounder_ EN.pdf.

[101] . Ibid.

[102] . Submissions from the governments of Indonesia, the EU and its Member States, Morocco, Thailand, Chile, Ireland, Japan (joint submission), Costa Rica, Turkey, Brazil, South Africa, China, the Republic of Korea, UNCITRAL Secretariat, Note, https://undocs.org/en/A/CN.9/ WG.III/WP.166.

[103] . Analysis of the applicable BiH BITs conducted by the author, based on the treaty texts available in the UNCTAD Country Navigator, https://investmentpolicy.unctad.org/country-navigator/ 28/bosnia-and-herzegovina.

[104] . Agreement on the Promotion and Protection of Investments between Bosnia and Herzegovina and the Federal Republic of Yugoslavia, Art. 9, https://investmentpolicy.unctad.org/ international-investment-agreements/treaty-files/490/download.

[105] . Submissions from the governments of Indonesia, the EU and its Member States, Morocco, Thailand, Chile, Ireland, Japan (joint submission), Costa Rica, Turkey, Brazil, South Africa, China, the Republic of Korea, UNCITRAL Secretariat, Note, https://undocs.org/en/A/CN.9/ WG.III/WP.166.

[106] . Felipe Hees, Pedro Mendonc¸a Cavalcante and Pedro Paranhos, The Cooperation and Facilitation Investment Agreement (CFIA) in the context of the discussions on the reform of the ISDS system, Investment Policy Brief (May 2018).

[107] . UNCITRAL Secretariat, Note, Possible reform of investor-State dispute settlement (ISDS), Submission from the Government of Brazil 3 (11 June 2019), https://undocs.org/en/A/CN.9/ WG.III/WP.171.

[108] . Ibid.

[109] . UNCITRAL Secretariat, Note, Possible reform of investor-State dispute settlement (ISDS), Submission from the Government of Brazil 3 (11 June 2019), https://undocs.org/en/A/CN.9/ WG.III/WP.171.

[110] . Ibid.

[111] . Press Release of the Council of Ministers 27 November 2019 http://www.vijeceministara.gov .ba/saopstenja/sjednice/saopstenja_sa_sjednica/default.aspx?id=26838&langTag=bs-BA.

[112] . The Decision on the Establishment of the Permanent Negotiating Body of Bosnia and Herzegovina for the Peaceful Settlement of International Investment Disputes (Official Gazette BiH, no. 17/18).

[113] . Decision on the Establishment of the Permanent Negotiating Body of Bosnia and Herzegovina for the Peaceful Settlement of International Investment Disputes, Art. 6 (Official Gazette BiH, no. 17/18).

The Investor-State Dispute Settlement System

Editors

Contributors

Summary of Contents

Summary of Contents

Summary of Contents

Table of Contents

The Path of (Re)volution of the International Investor-State Dispute Settlement Regime: A Case Study of Bosnia and Herzegovina

The 2015 India Model BIT and Its Suitability under ISDS

Chronicles of Middle East in Investor-State Arbitration: Autopsy of Prevalent Practice Trends and Future Epidemic Challenges

The Rise of NAFTA 2.0: A Case Study in Effective ISDS Reform

Reshaping Investor-State Dispute Settlement Through an Appellate Review Mechanism

Application, Creation and Control

State Responsibility for Acts of State-Controlled Entities in Investor-State Dispute Settlement

Striking Back: An Investor’s Right to Confront Its Home State’s Decision to Terminate Investment Protection Agreements

Acknowledgements

Acknowledgements

Foreword

Foreword

Foreword

§3.01 INTRODUCTION

§3.02

§3.02 ISDS REFORM AT THE GLOBAL LEVEL: UNCITRAL WG III

§3.02[A]

[A] Reform Options for Consistency, Correctness and Predictability of the Interpretation of Treaties and Principles of International Law

§3.02[A]

§3.02[A]

§3.02[B]

[B] Reform Options for Independence and Impartiality of the Arbitrators and Decision-Makers, Diversity and Transparency in ISDS

§3.02[B]

§3.02[C]

[C] Reform Options for Cost and Duration of ISDS Proceedings

§3.03

§3.03 ISDS AT THE REGIONAL LEVEL: EU PERSPECTIVE

POST-ACHMEA

§3.03

§3.04[A]

§3.04 ISDS REFORM AT THE NATIONAL LEVEL: THE CASE OF BiH

[A] The Existing ISDS Framework in BiH

§3.04[B]

[B] The Future of ISDS in BiH as an EU Member State

§3.04[B]

§3.04[B]

§3.04[C]

[C] ISDS Reform Options for the Surviving BiH BITs

§3.04[D]

[D] ISDS Reform in BiH: Spotlight on Dispute Prevention and ADR

§3.04[E]

[E] Structured and Effective Amicable Settlement Provisions (Consultations, Negotiations, Mediation)

§3.04[F]

[F] Institutional Framework for Amicable Settlement Proceedings: Best Practices from Brazil and BiH

[1] Cooperation and Facilitation Investment Agreement in Brazil

§3.04[F]

[2] Permanent Negotiating Body for the Peaceful Settlement of International Investment Disputes in BiH

§3.05

§3.05 CONCLUSION

§3.05

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